The Federal Reserve and economists concerned about inflation monitor changes in technology, knowing improvements in technology tend to

Question

Quizplus · Accepted Answer

Improvements in technology tend to increase supply by making production processes more efficient, which results in lower costs of production and lower prices. This is known as the "technological progress effect." As a result, the supply curve shifts to the right, causing prices to decrease and quantity supplied to increase. This stimulates economic growth and employment but can also lead to inflation if demand does not keep up with the increased supply.

The Federal Reserve and Economists Concerned About Inflation Monitor Changes