Which of the following fiscal policy actions is most likely to increase aggregate supply?
A)an increase in personal income tax rates
B)a reduction in interest rates that encourages consumers to purchase more durable goods
C)an increase in transfer payments to unemployed workers
D)an increase in government spending on infrastructure that increases private sector productivity

Question

Quizplus · Accepted Answer

An increase in government spending on infrastructure can enhance productivity by improving transportation, communication, and utilities, which can lead to an increase in aggregate supply.

Which of the Following Fiscal Policy Actions Is Most Likely