Suppose the Economy Is Producing at the Natural Rate of Output

Multiple Choice

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 in the short run and ________ in the inflation rate in the short run.

A) an increase; an increase
B) a decrease; a decrease
C) a decrease; an increase
D) no change; no change