Supply-side economic policies are designed to shift the aggregate ...

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Supply-side economic policies are designed to shift the aggregate supply curve to the right, whereas Keynesian economic policies focus on shifting the aggregate demand curve to the right during recessions and to the left during an economic expansion.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

According to rational expectations theory,
 a. there is absolutely nothing government can do, even in the short run, to reduce the economy's unemployment rate.
  b. the government can use fiscal policy such as increased government spending or lower tax rates to reduce unemployment.
  c. a modern extension of Keynesian economics exists.
  d. discretionary fiscal policy is essential for prolonged growth.
  e. market participants can be fooled in the long run by monetary and fiscal policy rules.

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Answer to Question 1

True

Answer to Question 2

a