Government investments to improve the quality of public infrastructure like roads, transit and sewers
A) decreases both long-run and short-run aggregate supply.
B) increases aggregate quantity supplied.
C) increases only long-run aggregate supply.
D) increases both long-run and short-run aggregate supply.
E) decreases aggregate quantity supplied.

Question

Quizplus · Accepted Answer

Government investments to improve the quality of public infrastructure like roads, transit and sewers will increase both long-run and short-run aggregate supply. In the short-run, it will create job opportunities, reduce transportation and production costs, and increase productivity. In the long-run, it will enhance economic growth, improve the quality of life for citizens, and attract investments resulting in increased productive capacity. Hence, the government investment will lead to an increase in both short-run and long-run aggregate supply.

Government Investments to Improve the Quality of Public Infrastructure Like