Question

If the citizens of a country want to increase the rate of economic growth, they should...

  1. If the citizens of a country want to increase the rate of economic growth, they should focus their efforts on shifting (the long run - both – the short run) aggregate supply curve(s) to the (left - right).
  1. Temporary policy interventions using increased government spending in response to economic shocks are generally more effective at counteracting (negative supply-side - negative demand-side) shocks than (negative supply-side - negative demand-side) shocks.

Homework Answers

Answer #1

(1) If the citizens of a country want to increase the rate of economic growth, they should focus their efforts on shifting the long run aggregate supply curve to the right.

[Since rightward shift in LRAS will increase potential GDP, increasing growth rate]

(2) Temporary policy interventions using increased government spending in response to economic shocks are generally more effective at counteracting negative demand-side shocks than negative supply-side shocks.

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