If the adoption of a new technology led to gains in productivity ________.
A)the ensuing positive supply shock would lead to an immediate increase in output
B)in the short-run,the ensuing increase in supply would lower inflation
C)and if this new technology permanently altered the productive capacity of the economy then the increase in output and decrease in inflation would be permanent as well
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

If a new technology leads to gains in productivity, it will likely result in an increase in output and a decrease in inflation. This positive supply shock would have immediate effects in the short-run, but if the technology permanently alters the productive capacity of the economy, the effects on output and inflation would be permanent as well. Therefore, all of the above choices are correct.

If the Adoption of a New Technology Led to Gains