Which of the following would be considered a supply-side policy ?
Correct answer: B. Investment tax credits for businesses to encourage investment
- A. An increase in the minimum wage that would cause consumer spending to increase
- B. Investment tax credits for businesses to encourage investment
- C. Restrictions placed on the amount that can be imported
- D. An increased in government spending that would lead to increased aggregate demand
Explanation
Investment tax credits reduce the cost of acquiring capital and encourage firms to invest, which expands productive capacity. The other choices mainly affect consumption, imports or aggregate demand rather than supply capacity.
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