If a Market Economy Has a Self-Correcting Mechanism, When Output

question 165

Multiple Choice

If a market economy has a self-correcting mechanism, when output is lower than potential or full-employment output,

• A) changes will occur that will automatically guide the economy back to full employment.
• B) resource prices will increase.
• C) prolonged unemployment such as was experienced during the Great Depression will occur.
• D) the economy will fall into a more severe recession.