In the long run, fiscal policy primarily affects
A) aggregate demand. In the short run, it affects primarily aggregate supply.
B) aggregate supply. In the short run, it affects primarily saving, investment, and growth.
C) saving, investment, and growth. In the short run, it affects primarily aggregate demand.
D) saving, investment, and growth. In the short run, it affects primarily aggregate supply.

Question

Quizplus · Accepted Answer

In the long run, fiscal policy affects saving, investment, and growth by influencing the economy's productive capacity. In the short run, it primarily affects aggregate demand by altering government spending and taxation.

In the Long Run, Fiscal Policy Primarily Affects