Supply-side policies can be described in terms of the aggregate demand and aggregate supply model as an attempt to shift:
A) The aggregate demand curve to the right
B) The aggregate supply curve to the right
C) Both the aggregate supply curve and the aggregate demand curve to the right
D) The aggregate supply curve to the right and the aggregate demand curve to the left

Question

Quizplus · Accepted Answer

Supply-side policies aim to increase the productive capacity of an economy, thus shifting the aggregate supply curve to the right. This is typically achieved through measures such as tax cuts, reducing regulations, and promoting investment in infrastructure or education. Shifting the aggregate supply curve to the right can lead to lower prices and higher output, which can ultimately benefit the economy. However, supply-side policies do not directly affect aggregate demand, so option A, C, and D are incorrect.

Supply-Side Policies Can Be Described in Terms of the Aggregate