In a story from HYPERLINK "http://www.ft.com/" www.ft.com (1/31/2005) describing Ireland's transformation to a prosperous economy it was noted that "Ireland's story is unique: a small, English- speaking, non- industrialised country on the edge of Europe was able to secure structural funds from the EU, cut taxes, deregulate than its neighbours and attract lots of foreign companies in the process." As these policies were implemented investment steadily increased in Ireland and potential GDP increased.
These changes would be shown as
i. rightward shifts of the AD curve
ii. leftward shifts of the SAS curve
iii. rightward shifts of the LAS curve

Question

Quizplus · Accepted Answer

The policies described in the article would lead to rightward shifts of the AD curve as investment increased and the economy expanded. The deregulation and attraction of foreign companies would lead to increased productivity and potential GDP, leading to rightward shifts of the LAS curve. However, these policies could also lead to a decrease in costs for businesses, leading to leftward shifts of the SAS curve. Therefore, the correct answer is C, as only i and iii would be consistently applicable.

In a Story from HYPERLINK "Http://www