Question: There is little doubt that computers and the Internet have changed our economy. Information technology (IT) can boost efficiency in nearly everything: Markets are more efficient, IT is global, and IT improves the design, manufacture, and supply chain of products we produce. Use the aggregate demand and supply framework discussed in this chapter to show the impact of IT on the U.S. economy.

Unemployment can be caused by a reduction in aggregate demand or aggregate supply. Both changes are represented by leftward shifts in the curves. Does it matter whether the shift occurs in aggregate demand or aggregate supply? Use the AD/AS framework to show why or why not.