How Does Technology Affect the Business Cycle?

Answer and explanation: When technology advances, less input is required from the same resources to produce the same output more output can be derived from the same resources. Let’s say that instead of oil, the world will run out of gold because gold is a resource that is limited and its production is in a decline. The result will be economic collapse of society due to inability of people to pay their debts. The same thing will happen when there are any physical limitations like lack of fuel for automobiles. Therefore, fewer physical products can be produced to cater to human needs.

if technology advances


Answer and explanation: If no new policies are implemented to control pollution and if humans continue to pollute the earth, we will reach the point where the atmosphere will be uninhabitable. According to famous environmentalist, we may have already reached that point and if this happens, what will follow will be famine, mass starvation and even the deterioration of the human condition to the point of extermination. This is how ill-informed some think about the effects of technology on the environment. As a result, they do not support any new development that would involve more power and less harmful emissions to the environment. As a result, they do not support or participate in the development of clean energy technology and energy efficiency because they are so deeply involved in the extractive industries.


Answer and explanation: If technologies advances without corresponding policies to curb pollution and if humans continue to pollute the earth, the result will be disastrous. Again, this is why some people still do not support technology breakthroughs. They do not want to see anything that will cause significant harm to the environment. In addition, some of them are also afraid of the possible economic impact that these technologies may have.


Answer and explanation: Even though these technological advances will bring about an economic growth, it can only be good for the economy if it helps in enhancing economic growth. In addition, the energy sector alone will bring about other benefits because it is the fastest growing sector in the economy. The government can use the tax money generated from technology developments to fund other programs. For instance, if it discovers that these technological advances are responsible for improving air quality, it can release funds for research into the environment and alternative sources of energy.


Answer and explanation: Technology breakthroughs can either be good or bad. They depend on the nature of the technology. On one hand, more outputs can be produced from the same input during a business cycle expansion, when more inputs are added. But on the other hand, if these innovations increase the total cost of production and total employment during a business cycle contraction, employment and output may decline. This result in a dilemma for policy makers because they want the economy to expand even when employment declines, but they don’t want the economy to contract when employment rises.


There is another question that arises from this dilemma. How should one focus on technology advances? Should the main focus be on the effects of technological advances on employment and output, or should the main focus be on the effects of technological advances on the availability of main memory? In this article we will explore these questions in more detail.


As stated earlier, there are two main ways by which technological advances affect employment and output. One way is directly through changes in overall income. The other way is indirectly through changes in overall employment and output due to technological advances. If total employment declines because of increases in output, overall income falls because of decreases in aggregate demand. However, if total employment increases because of increases in aggregate demand, overall income increases because of an increase in aggregate income due to improvements in technology.


Technological changes tend to either reduce total employment or increase aggregate demand across the business cycle. Changes in aggregate demand create a powerful force that tends to increase employment over time. Because of this, employment during a business cycle expansion is primarily determined by changes in total employment. Changes in aggregate income create changes in employment and output relative to the other factors of demand in the economy. Technological advances can either decrease aggregate employment or increase employment and output relative to the other factors of demand in the economy during a business cycle expansion.

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