Suppose the economy is producing at the natural rate of output.Assuming a fixed natural rate of output and everything else held constant,the development of a new,more productive technology will cause ________ in the unemployment rate in the long run and ________ in the aggregate price level in the short run.
A)an increase; an increase
B)a decrease; a decrease
C)no change; a decrease
D)no change; no change

Question

Quizplus · Accepted Answer

In the long run, the unemployment rate returns to the natural rate, so there is no change. In the short run, more productive technology increases aggregate supply, leading to a decrease in the aggregate price level.

Suppose the Economy Is Producing at the Natural Rate of Output.Assuming