suppose new driverless car technology invented, and that this new technology increases productivity in the short...

suppose new driverless car technology invented, and that this new technology increases productivity in the short run. use the AD/AS model to explain the impact of the new technology on the Canadian technology on short run. explain how price level, employment and GDP WILL change in the short ru

Expert Solution

Aggregate supply is the total supply of goods and services that firms in a national economy plan on selling during a specific time period. It is the total amount of goods and services that firms are willing to sell at a specific price level in an economy.Equilibrium is the price-quantity pair where the quantity demanded is equal to the quantity supplied. It is represented on the AS-AD model where the demand and supply curves intersect. In the long-run, increases in aggregate demand cause the price of a good or service to increase. When the demand increases the aggregate demand curve shifts to the right. The aggregate supply is affected only by capital, labor, and technology. Examples of events that would increase aggregate supply include an increase in population, increased physical capital stock, and technological progress. So when new driverless car technology invented, and that this new technology increases productivity in the short run , This will shift the AS curve rightwards and GDP will rise and prices will fall and employment will increase .

Rahul Sunny answered 2 years ago

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