According to supply-side policy,the aggregate supply curve should be:
A) Shifted to the right during periods of inflation and to the left during a recession.
B) Shifted to the left during periods of inflation and to the right during a recession.
C) Shifted to the right to address most economic situations.
D) Left alone to move as the market directs it.

Question

Quizplus · Accepted Answer

According to supply-side policy, the focus is on increasing the productive capacity of the economy, which is achieved by promoting investment, innovation, and entrepreneurship. This leads to a shift in the aggregate supply curve to the right, indicating an increase in potential output. This policy is believed to be effective in addressing most economic situations, such as inflation, recession, and long-term growth. Therefore, the correct choice is C.

According to Supply-Side Policy,the Aggregate Supply Curve Should Be