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Public policies that promote economic growth include investment in education and human capital, infrastructure spending, research and development incentives, protection of property rights, and policies that encourage saving and investment. These policies shift LRAS right, increasing potential output.
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Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
Supply-side fiscal policies, such as targeted tax cuts on business investment or research and development, are primarily intended to:
Increase aggregate demand in the short run.
Decrease short-run aggregate supply.
Increase long-run aggregate supply and promote economic growth.
Reduce the national debt.
Stabilize the short-run Phillips curve.
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.