During a recession caused by a reduction in short-run aggregate supply, a supporter of supply-side policies would focus on policies that:
A) increase aggregate demand.
B) increase aggregate supply.
C) decrease aggregate demand.
D) decrease aggregate supply.

Question

Quizplus · Accepted Answer

Supply-side policies aim to increase productivity and efficiency in the economy, thereby increasing aggregate supply. During a recession caused by a reduction in short-run aggregate supply, these policies would focus on measures to enhance the productive capacity of the economy.

During a Recession Caused by a Reduction in Short-Run Aggregate