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    Doing economics homework on supply-side policies, when I came across this question:

    How does increase government investment increase aggregate supply?

    I'm not sure what the question refers to. Is this the government investing in it's own businesses, or foreign investments? And how does this relate to supply-side policies?
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    It could be the 'Infrastructure that the Govt. pays for using tax revenue, in order to improve facilities => productive potential => AS'

    Supply-side policy:
    http://www.economicsonline.co.uk/Glo..._policies.html
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    (Original post by DianaDom)
    Doing economics homework on supply-side policies, when I came across this question:

    How does increase government investment increase aggregate supply?

    I'm not sure what the question refers to. Is this the government investing in it's own businesses, or foreign investments? And how does this relate to supply-side policies?
    I think they're referring to policies such as spending on education, providing grants to firms that employ more productive technology etc. In other words, ways in which government spending is utilised to boost aggregate supply.
 
 
 
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