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.

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Definitions:

Ecological Demands

Ecological demands refer to the pressures and requirements placed on organisms by their environments, which can influence behavior and evolution.

Sociohistorical Context

Refers to how historical and societal factors influence and shape behaviors, events, and perceptions.

Cultural Heritage

The tradition of material possessions and non-material characteristics transmitted through generations in a group or society.

Behavioural Economics

A field of study that combines insights from psychology and economics to explore how people make economic decisions in real-world situations.