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An economy has a downward-sloping aggregate demand curve AD. The government cuts unemployment benefit and spends the money saved on apprenticeship schemes, and this shifts the vertical long-run aggregate supply curve from LRAS1 to LRAS2, further to the right. AD does not move.
What is the most likely result of this policy?
[1 mark]
🧭Modelled on Cambridge 9708 · May/Jun 2026 · Paper 11 · Q30