Technological change, such as the information technology revolution of the 1990s can shift the aggregate supply curve outward.If, at the same time, the government is decreasing spending, the most likely outcome of these two factors is a(n)
A)increase in the price level.
B)decrease in the price level.
C)increase in real GDP.
D)decrease in real GDP.

Question

Quizplus · Accepted Answer

Technological advancements increase aggregate supply, potentially lowering the price level. Simultaneously, decreased government spending reduces aggregate demand, further contributing to a decrease in the price level.

Technological Change, Such as the Information Technology Revolution of the 1990s