Final answer:
Technological progress results in the long-run aggregate supply curve shifting to the right, demonstrating economic growth with a lower natural unemployment rate. This reflects the increased capacity of the economy to produce goods and services, as well as the creation of new jobs. The correct answer to the student's question is C. The long-run aggregate supply curve will shift to the right, resulting in economic growth and a lower natural unemployment rate.
Explanation:
Steady advances in technological development will result in the long-run aggregate supply curve (LRAS) shifting to the right, which is indicative of long-term economic growth. According to neoclassical economic theory, an increase in productivity over time, such as that brought about by improvements in technology, will expand an economy's production potential. As a result, the vertical line representing potential GDP, or the full employment level of GDP, shifts to the right over time. This signifies an increase in the economy’s capacity to produce goods and services without causing inflationary pressures. In turn, this growth is typically associated with a lower natural rate of unemployment due to the creation of new jobs and industries.
Therefore, the correct answer to the student's question is: C. The long-run aggregate supply curve will shift to the right, resulting in economic growth and a lower natural unemployment rate. This answer is supported by the concepts of aggregate demand/aggregate supply (AD/AS) model and neoclassical theory regarding the effects of technological progress on economic indicators such as production, employment, and price levels.