One possibility to counteract the effects of an anticipated decrease in future total factor productivity would be for the government to

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decrease spending.

decrease taxes.

increase spending.

This would result in the output demand curve

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shifting to the right

remaining unchanged

shifting to the left

and the labour supply curve

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shifting to the right.

remaining unchanged.

shifting to the left.

There would also be

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a shift to the right in the labour demand curve.

a shift to the left in the output supply curve.

a shift to the right in the output supply curve.

$$Therefore$,$ aggregate output would

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increase,

decrease,

stay the same,

the real interest rate would

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stay the same,

increase,

decrease,

employment would

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decrease,

stay the same,

increase,

and the real wage would

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stay the same.

decrease.

increase.

Part $5$

b$.$ What could go wrong with the$$ government's policy in part$($a$)?$ Discuss.

Part $6$

If the government did choose the given response to counteract the effects of an anticipated decrease in future total factor$$ productivity, there would be additional negative effects on

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output supply

output demand

labour demand

in the form of

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