An Economy May Not Quickly and Automatically Eliminate a Recessionary

question 147

Multiple Choice

An economy may not quickly and automatically eliminate a recessionary output gap because wages

• A)never change in response to changes in the demand for labour.
• B)have a tendency to be sticky downward.
• C)have a tendency to fall too quickly.
• D)have a tendency to rise too quickly.
• E)are flexible but prices have a tendency to be sticky downward.

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Definitions:

Intended

Something that is planned or meant to happen in a specific way.

Price Floors

Price controls that outlaw trade at prices below the floor.

Intended

Designed or planned to serve a particular purpose.

Technological Advancement

The process of innovation and improvement in technology, leading to the development of new products or the enhancement of existing ones.