Government investments to improve the quality of public infrastructure like roads, transit and sewers
A) shifts both LAS and SAS leftward.
B) increases aggregate quantity supplied.
C) shifts only LAS rightward.
D) shifts both LAS and SAS rightward.
E) decreases aggregate quantity supplied.

Question

Quizplus · Accepted Answer

Government investments to improve public infrastructure will increase aggregate demand in the short run due to the increase in government spending. This will shift both LAS and SAS rightward. In the long run, the increase in infrastructure will lead to increased productivity and efficiency, which will shift only LAS rightward. Therefore, the correct answer is D, as both short-run and long-run effects will shift both LAS and SAS rightward.

Government Investments to Improve the Quality of Public Infrastructure Like