According to the theory_________, technological change can be so rapid that some existing capital becomes obsolete and_________ .
A) new classical; productivity falls
B) real business cycle; aggregate demand increases
C) real business cycle; productivity falls
D) new classical; aggregate demand increases

Question

Quizplus · Accepted Answer

The theory referred to in the question is the real business cycle theory, which suggests that technological changes can lead to rapid shifts in productivity. As a result, some existing capital becomes obsolete, and productivity falls. Therefore, the correct choice is C.

According to the Theory_________, Technological Change Can Be So Rapid