In the diagram below, as a result of the government implementing a new industrial policy, the long-run aggregate supply curve shifts from LRAS$_1$ to LRAS$_2$
The shift in LRAS suggests that the industrial policy is most likely to have
caused firms to be more innovative.
2 )
created a positive output gap.
3 )
reduced employment and inflation.
4 )
reduced imports and exports.
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