Why do purely technological theories have difficulty explaining ...

[jayhills49]

Why do purely technological theories have difficulty explaining recessions in which real GDP falls?
 
  What will be an ideal response?

Question 2

Which of the following statements is true?
 
  A) According to the labor supply curve, as the real wage rises, more workers leave the labor force.
  B) According to the labor supply curve, as the real wage rises, employers are willing to provide fewer jobs.
  C) According to the labor supply curve, as the real wage rises, workers are willing to provide fewer hours of labor.
  D) According to the labor supply curve, as the real wage rises, workers are willing to provide more hours of labor.
  E) According to the labor supply curve, as the real wage rises, employers are willing to provide more jobs.

[jsm54321]

Answer to Question 1

Although the rate of technological progress is at the root of long-run variation in economic growth and technological breakthroughs could cause a rapid increase in a particular industry's output, purely technological theories have difficulty explaining recessions in which real GDP falls. This is because a technological regress, in which the technological capabilities of an economy deteriorate, seems an unlikely explanation for recessions. It is hard to imagine, for example, that a negative technology shock caused the Great Depression.

Answer to Question 2

D