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 and ________ in the aggregate price level in the long run.
A)an increase; an increase
B)a decrease; a decrease
C)a decrease; an increase
D)no change; no change

Question

Quizplus · Accepted Answer

If the economy is already producing at the natural rate of output, an increase in productivity due to the new technology will shift the long-run aggregate supply curve to the right, allowing the economy to produce more output without raising prices. As a result, there will be no change in the unemployment rate or the aggregate price level in the long run.

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