Which of the Following Is Not Consistent with a Self-Correcting

question 23

Multiple Choice

Which of the following is not consistent with a self-correcting economy?

• A)Market forces work relatively well in pushing the economy to potential GDP.
• B)Prices and wages are flexible.
• C)A contractionary gap is corrected through falling wages and prices.
• D)The short-run aggregate supply tends to shift until it intersects aggregate demand at potential GDP.
• E)An active approach to a recession or depression.

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Definitions:

Short-Term Lethargy

A temporary state of sluggishness or lack of energy.

Impaired Coordination

A reduction in the ability to perform movements smoothly and accurately, usually due to neurological disorders or injuries.

Prescription Drug

Medications that require a doctor's authorization before they can be purchased or consumed, typically due to their potency, side effects, or potential for abuse.

Cannabis Use

The consumption of cannabis, a psychoactive drug from the Cannabis plant, used medically or recreationally.