Holding other factors constant, if new technology becomes available that allows machines to produce manufactured goods more quickly and with fewer defects, then the real interest rate will ________ and the equilibrium quantity of national saving and investment will ________.
A)increase; increase
B)increase; decrease
C)increase; not change
D)decrease; increase

Question

Quizplus · Accepted Answer

A new, better technology increases business investment and shifts the demand for investment to the right, causing higher interest rates and the quantity of national savings and investment to increase.

Holding Other Factors Constant, If New Technology Becomes Available That