Recessions occur because of
A) real adverse shocks to the economy.
B) shocks to technology.
C) difficulties in coordinating economic affairs.
D) all of the above

Question

Quizplus · Accepted Answer

Recessions can occur due to real adverse shocks to the economy such as natural disasters, unexpected inflation or deflation, changes in government policies, or changes in global economic conditions. Technological shocks, such as the development of new inventions or innovations can also lead to recessions. Difficulties in coordinating economic affairs, such as mismanagement of fiscal and monetary policies, can also contribute to the onset of a recession. Therefore, all three factors can contribute to the occurrence of a recession.

Recessions Occur Because of