An Economy Is Likely to Recover from a Recession Quickly

question 190

Multiple Choice

An economy is likely to recover from a recession quickly (without government intervention) when

• A)it is caused by a negative supply shock and wages are fixed.
• B)it is caused by a leftward shift in aggregate demand and wages are fixed.
• C)it is caused by a leftward shift in aggregate demand and wages are flexible.
• D)it is caused by a financial crisis.
• E)it is caused by a leftward shift in aggregate supply and output prices are fixed.

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Definitions:

Cournot Equilibrium

A concept in economic theory where firms reach a state in which each firm chooses the optimal output level assuming the output levels of the other firms.

Duopoly

A market structure characterized by two producers/sellers in competition with each other.

Constant Costs

Costs that remain unchanged regardless of the level of output or activity within a certain range.

Corncob Pipes

Pipes made from the dried cob of a corn plant, often used for smoking tobacco.