The model predicts that if there is a technology, A, shock, the interest rate, i, will be:
A)relatively high during an economic expansion or a recession.
B)relatively low during an economic expansion or a recession.
C)relatively high during an economic expansion and relatively low during a recession.
D)relatively low during an economic expansion and relatively high during a recession.

Question

Quizplus · Accepted Answer

A technology shock typically leads to increased productivity and economic expansion, which can cause interest rates to rise as demand for investment increases. Conversely, during a recession, demand for investment decreases, leading to lower interest rates.

The Model Predicts That If There Is a Technology, A