Supply-side policies boost long-run productive capacity

Steps:

• Define supply-side policy as government measures to increase output potential through efficiency, skills, or incentives.
• Evaluate options: identify which directly enhances production factors like labor or technology.
• Eliminate demand-side tools that manage short-term spending or inflation.
• Confirm the match with economic theory on aggregate supply shifts.

Why C is correct:

• Providing training courses improves labor skills and productivity, shifting the long-run aggregate supply curve rightward per economic growth models.

Why the others are wrong:

• A: Increasing interest rates is contractionary monetary policy to curb demand and inflation.
• B: Increasing taxation reduces consumer spending, acting as demand-side fiscal policy.
• D: Selling government bonds withdraws money from circulation, a demand-management tool in fiscal policy.

Final answer: C