A) On a graph, use the AS-AD model from Chapter 9 to show how output and the price level will respond in the short-run and the long-run to the invention of a new production technology that is expected to increase the future marginal product of capital (assume that current productivity is unaffected by this invention). B) Answer part A again, using the IS-LM model. What will happen to output, the real interest rate, and the price level in the short-run and the long-run?
