A new technology revolutionises (e.g. the internet). How will the following changes affect the national economy?

With any situation, it will either affect demand or supply. The factors affecting demand include income levels, consumer tastes and preferences, substitutes/complements and expectations. The factors affecting supply include costs of production, natural conditions, technology and government policies. From the question it is therefore made clear that we are looking at the supply side of the economy. Due to the rise of the new technology, it will lead to cheaper costs of production for firms. Therefore, the supply curve will shift to the right which will result in a fall in price and rise in quantity demanded.

Answered by Aaron P. Economics tutor

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