If a major technological breakthrough occurs, then the:
A) investment demand curve will shift downward.
B) investment demand curve will shift upward.
C) consumption function will shift downward.
D) consumption function will shift upward.

Question

Quizplus · Accepted Answer

A major technological breakthrough leads to an increase in productivity and efficiency, which reduces the cost of production and makes firms more profitable. This increases the expected rate of return on investment, leading to an upward shift in the investment demand curve. The consumption function, on the other hand, is primarily influenced by disposable income and consumer attitudes, and is not directly affected by technological changes. Therefore, choices A and C are incorrect.

If a Major Technological Breakthrough Occurs, Then The