Supply-side policy often leads to fiscal consequences. Which statement is incorrect?
- AIncreased government spending supporting technical progress has beneficial long-term supply-side effects but may have short-term inflationary consequences.
- BIncreased government expenditure on training increases a country’s long-run aggregate supply (LRAS) and also has an expansionary effect on aggregate demand (AD).
- CReduced government infrastructure spending reduces an economy’s LRAS and has a short-term expansionary effect on AD.
- DReduced rates of tax on higher incomes increases an economy’s LRAS and has an expansionary effect on AD.