Other things the same, continued increases in technology lead to
A)continued increases in the price level and real GDP.
B)continued increases in the price level but not continued increases in real GDP.
C)continued increases in real GDP but not continued increases in the price level.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

Technological progress leads to increases in productivity, which in turn leads to an increase in real GDP. However, if the money supply remains constant, increased productivity will lower prices and so there will not be a continued increase in the price level. Therefore, option C is the correct answer. Option A is incorrect because continued increases in the price level are not a necessary consequence of technological progress. Option B is incorrect because continued increases in the price level do not necessarily result in continued increases in real GDP. Option D is incorrect because option C is the correct answer.

Other Things the Same, Continued Increases in Technology Lead to