Fiscal policy cannot cure all ills. Sometimes:

1- The economy needs a long-run boost.

2- The problem isn't low Aggregate Demand, but low Long Run AS growth.

3- Almost all machines and workers are employed; they're just not very productive.

Sort the following cases into either "fiscal solution possible" or "productivity problem":

A) American wages have grown slowly for many years.

B) Peasants in the Middle Ages are using primitive tools to produce food.

C) Peasants in the Middle Ages suffer from a drought that hurts the season's crops.

D) American workers get laid off by the hundreds of thousands because of a rapid collapse in investment purchases.

E) Schools are doing a bad job teaching students, so students become ineffective employees.

F) High taxes on investment discourage people from saving and building up the capital stock for future workers to use.

G) High taxes on investment discourage businesses from purchasing investment goods.