Which of the following is the most likely effect of an increase in government spending on goods to build or repair infrastructure?
A)It would shift the aggregate-demand curve to the left.
B)It would shift the long-run aggregate-supply curve to the left. .
C)It would shift the short-run aggregate-supply curve to the left.
D)It would shift the long run aggregate-supply curve to the right.

Question

Quizplus · Accepted Answer

An increase in government spending on goods to build or repair infrastructure would lead to an increase in investment, which would increase the economy's long-run capacity. This, in turn, would lead to a shift in the long-run aggregate-supply curve to the right.

Which of the Following Is the Most Likely Effect of an Increase