Which of the following is the best example of a way in which fiscal policy can positively influence aggregate supply?

Question

BlackTom AI · Accepted Answer

Subsidies for research and development raise productivity and lower firms’ costs, shifting aggregate supply (AS) to the right.

1. Relevant knowledge points and concepts
- Fiscal policy: government taxation and spending decisions. It can be demand‑side (affecting aggregate demand, AD) or supply‑side (affecting AS).
- Aggregate supply: the total output firms are willing to produce at each price level. Supply‑side fiscal measures increase productive capacity or reduce production costs (e.g., R&D subsidies, investment in infrastructure, tax incentives).
- Monetary policy (central bank) mainly affects AD through interest rates.

2. Step‑by‑step reasoning
- Option c: R&D subsidies reduce firms’ effective costs of innovating, encourage technology adoption, and raise long‑run productivity. Higher productivity increases potential output and shifts the AS curve rightward (positive influence on AS).
- Compare alternatives: options a and b affect AD rather than AS; option d clearly works against AS.

3. Calculations / intermediate steps
- No numeric calculation is required. Conceptual chain: R&D subsidy → more innovation/technology → higher labor/productivity per unit → higher potential output → AS shifts right.

4. Why the correct answer is correct
- The government increasing subsidies for firms’ R&D is a classic supply‑side fiscal policy: it directly targets factors that increase productive capacity and lower unit costs, thereby increasing aggregate supply rather than merely changing spending levels.

5. Why other options are incorrect
- a. Central bank lowers cash rate: monetary policy, mainly increases AD (investment/consumption), not a fiscal tool or a direct AS improvement.
- b. Increase in welfare payments: fiscal but primarily increases AD/consumption; may not increase productive capacity and can reduce labor supply incentives.
- d. Increasing company tax rates: contractionary for supply—raises firms’ costs and discourages investment, reducing AS.

6. Conclusion
Therefore the best example is option c: "The government increases subsidies for firms for research and development of new technologies." This matches the provided correct answer.

Which of the following is the best example of a way in which fiscal policy can positively influence aggregate supply?单项选择题

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