Supply-side policy is designed to shift the production possibilities curve:
A) Inward and the aggregate supply curve to the left.
B) Inward and the aggregate supply curve to the right.
C) Outward and the aggregate supply curve to the left.
D) Outward and the aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

Supply-side policy aims to increase the efficiency and productivity of firms, which would shift the production possibilities curve outward, and also increase aggregate supply, which would shift the aggregate supply curve to the right. This allows for an increase in output and economic growth without risking inflation.

Supply-Side Policy Is Designed to Shift the Production Possibilities Curve