Quick 10 PTS, HW Help, Macroeconmics - If a technological advance in a firm were to occur how would it...?

Question

affect unemployment, inflation, interest rates and national income? Apparently, this would lead to lower productions costs...

Assumptions: Complete Flexible Wage Rates

You don't have to give me the answer just guide me please

Answer 1

If the technological advance is labor saving, intially it may increase unemployment but with labor wages being flexible, employment will rise again.

Generally, technological advances increases productivity of labor and/ or capital. Higher productivity means higher profits, if not also higher wages, and therefore increases National Income. Technological gains may also lead to savings in raw materials/ fule and thereby allows greater amount of output from the same quantity of raw material/ fuel. This makes possible for the economy to produce greater output if there is suffienct demand to absorb and hence adds to national income.

Technological advance means gais in productivity some where and hence would mean lower inflation because higher supplies. If the technological advance creates new products for new wants and the capital is scarce or rawmaterial is in short supply, prices of some other goods may rise as raw material prices or interest rates rise.

A labor- intensive technological may increase demand for labor and reduce unemployment. New technologies like internet and mobile have created considerable new employment.

Interest rates on borrwngs from the banks and market  may temporarily rise because of the increased demand for capital the firm may invest additional capital  to expand its capacity in the new technology capital equipment ad marketing new products

Answer 2

If the technological advance eliminates a division of labor, it increases unemployment.  Lower production costs typically are reflected in higher profits, not necessarily an increase in price.  

Income, inflation, interest rates, and national income are variables that are policy and planning sensitive to decisions of business and political leaders.