A New Technology Is Discovered That Results in All New

question 211

Multiple Choice

A new technology is discovered that results in all new cars producing 50 percent less pollution.The technology costs nothing to produce and cars do not change in price.As a result of the technology,there is a reduction in the number of visits people make to the doctor to complain of breathing difficulties.Which of the following is true?

• A)Real GDP decreases as a result of fewer doctor services being provided.
• B)Real GDP is not affected.
• C)Nominal GDP increases to reflect the improvement in the health of the population.
• D)Real GDP decreases to reflect the decrease in pollution.
• E)Nominal GDP does not change and real GDP increases.

---

Definitions:

Private Ownership

The holding of property by non-governmental legal entities or individuals, allowing control and use of the property according to the owner's preferences.

Dollar Votes

The “votes” that consumers cast for the production of preferred products when they purchase those products rather than the alternatives that were also available.

Product Market

A marketplace where final goods or services are bought and sold by consumers, businesses, and the government.

Laissez-Faire Capitalism

A hypothetical economic system in which the government’s economic role is limited to protecting private property and establishing a legal environment appropriate to the operation of markets in which only mutually agreeable transactions take place between buyers and sellers; sometimes referred to as “pure capitalism.”