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Part $1$

In$2021,$ a columnist writing on barrons.com predicted that the U$.$S$.$ economy was going to experience an increase in productivity. In March$2021,$ Congress enacted a$$ $$1\mathrm{.}9$ increase in$$ spending, formally called The American Rescue Plan Act of $2021.$

$$Source: Matthew C$.$ Klein, "Why the$$ Post$-$Pandemic Future Could Be$$ Bright: Productivity Gains Could Be Here to$$ Stay,"

barrons.com$,$

January$8,2021.$

a$.$ What effect would an increase in productivity have on the$$ short$-$run and$$ long$-$run aggregate supply$$ curves?

A$.$

Both the$$ short$-$run and$$ long$-$run aggregate supply curves will shift to the right.

B$.$

The$$ long$-$run aggregate supply curve will shift to the$$ right, while the$$ short$-$run aggregate supply curve will not change.

C$.$

The$$ short$-$run aggregate supply curve will shift to the$$ right, while the$$ long$-$run aggregate supply curve will not change.

D$.$

The$$ short$-$run aggregate supply curve will shift to the$$ right, while the$$ long$-$run aggregate supply curve will shift to the left.

Part $2$

b$.$ What effect does an increase in federal government spending have on the aggregate demand$$ curve?

A$.$

It will have no effect on the aggregate demand$$ curve, because federal spending only affects aggregate supply.

B$.$

It will shift the aggregate demand curve to the right.

C$.$

It will shift the aggregate demand curve to the left.

D$.$

It will have no effect on the aggregate demand$$ curve, because increases in federal spending result in equal decreases in consumer consumption.