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Chapter 22: Problem 4

A column in the Wall Street Journal considered two observations about the U.S. economy: "We live in an era of accelerating technological progress" and "In the years since the recession \(\ldots\) the economy has been growing very slowly." The writer concluded, "Both statements can't be completely correct." Do you agree with the writer's conclusion? Briefly explain.

Short Answer

Expert verified
Yes, both statements can be considered correct simultaneously. While technology might be growing at a significant pace, it may not immediately or necessarily result in fast economic growth due to various factors such as job displacement, delay in impact or other economic conditions.

Step by step solution

01

Understanding Terminologies

Economic growth is generally measured by increases in a country’s GDP (Gross Domestic Product), which reflects the total value of goods and services a country produces. Technological progress refers to the discovery of new or improved methods of producing goods and services.
02

Relationship Between Technological Progress and Economic Growth

Technological progress can lead to economic growth by creating efficiencies in production processes, increasing output per unit of input, creating new industries, and making existing goods and services cheaper. However, it is also possible for an economy to experience technological progress but slow economic growth.
03

Why Technological Progress and Slow Economic Growth Can Co-Exist

Although technological progress can increase production efficiency, other factors may impede economic growth. One reason could be that these new technologies displace existing jobs, leading to higher unemployment and thus lower GDP. Another would be that the benefits of technological advancements are not immediately apparent or felt in the economy. There might be a delay between the implementation of such advances and the visible impact on gross domestic product. In conclusion, it is indeed possible for the economy to experience technological progress and slow economic growth at the same time. Therefore, the two statements given do not necessarily contradict each other.

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Most popular questions from this chapter

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