Question

If technology makes production less expensive and at the same time exports decrease, which of the following will result with certainty?

A. Real GDP will decrease.

B. Real GDP will increase.

C. The price level will increase.

D. The price level will decrease.

E. Real output will remain the same.

Answer 1

If technology makes production less expensive and exports decrease, there will be a decrease in real GDP and an increase in the price level.

Step-by-step explanation:

If technology makes production less expensive and at the same time exports decrease, the result will be a decrease in real GDP and an increase in the price level.

When technology makes production less expensive, it leads to an increase in productivity and a decrease in production costs. This decrease in production costs can result in lower prices for goods and services, leading to a decrease in real GDP.

On the other hand, if exports decrease, it means that fewer goods and services are being sold to other countries, which can negatively impact real GDP. With a decrease in real GDP and the possibility of lower production costs, the price level is likely to increase.