What is the effect of technological progress and increases in the money supply on prices in the long run?
A)Both make the price level rise.
B)Both make the price level fall.
C)Technological progress makes the price level rise, while increases in the money supply make prices fall.
D)Technological progress makes the price level fall, while increases in the money supply make prices rise.

Question

Quizplus · Accepted Answer

Technological progress tends to increase productivity and lower costs, leading to a fall in prices in the long run. On the other hand, increases in the money supply tend to lead to an increase in demand, which can increase prices in the long run. Therefore, technological progress makes the price level fall, while increases in the money supply make prices rise in the long run.

What Is the Effect of Technological Progress and Increases in the Money