Economist B believes that the economy can get stuck in a recessionary gap. This economist most likely believes that
A) wages and prices are flexible.
B) wages and prices are inflexible downward.
C) government may need to enact contractionary fiscal policy to move the economy out of a recessionary gap.
D) the economy is self-regulating.
E) none of the above
B
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The market demand curve for labor
A) is the same as the market demand curve for the product labor produces because it is a derived demand. B) is determined by adding up the quantity of labor demanded by each firm at each wage, holding constant the other variables that affect the willingness of firms to hire workers. C) is perfectly inelastic because there is a finite number of workers in the market for labor. D) is determined by adding up the demand for labor by each firm at each wage, holding constant the other variables that affect the willingness of firms to hire workers.
For the purpose of statistically reporting the unemployment rate, "discouraged workers" are:
A. counted. B. not counted. C. offered other jobs. D. trained to do different work.