What 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 productivity over the long run. This increase in productivity would shift the long-run aggregate supply curve to the right.

What Is the Most Likely Effect of an Increase in Government