Expansionary supply-side policies increase productive capacity Steps:

• Define supply-side policy as measures that enhance long-term production potential, like improving infrastructure or skills.
• Identify expansionary aspect: policies that shift aggregate supply curve rightward to boost output without inflation.
• Assess options: check if they target supply factors (e.g., human capital, investment) versus demand (e.g., spending, money supply).
• Choose best fit: government investment in education directly builds workforce skills for sustained growth.

Why C is correct:

• Building schools invests in human capital, increasing labor productivity and aggregate supply per supply-side economics principles.

Why the others are wrong:

• A: Interest rate cut is expansionary monetary policy that stimulates demand, not supply.
• B: Tax cuts primarily boost short-term demand via increased disposable income, not core supply-side capacity.
• D: Currency devaluation enhances export competitiveness, acting as demand-side stimulus.

Final answer: C