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.