The Information Age technology revolution is causing many businesses to add new capital and improve their productivity. Focusing just on this effect on businesses, the long-run economic impact would be to
A) increase aggregate supply
B) decrease aggregate supply
C) increase aggregate demand
D) decrease aggeregate demand

Question

Quizplus · Accepted Answer

The Information Age technology revolution leads to improvements in productivity and efficiency for businesses. When businesses add new capital and enhance their productivity, they can produce goods and services more efficiently and at a lower cost. This increase in productive capacity of the economy would shift the aggregate supply curve to the right, indicating an increase in aggregate supply. This is because businesses are able to supply more at every price level, reflecting the long-run economic impact of technological advancements.

The Information Age Technology Revolution Is Causing Many Businesses to Add