The Great Recession of 2007-09 illustrated the situation where a negative demand shock occurred and
A)prices adjusted but the output level was inflexible.
B)the economy's overall price level was very flexible.
C)the economy's overall price level was "sticky."
D)prices and production were both "sticky," or inflexible.

Question

Quizplus · Accepted Answer

During the Great Recession, the economy's overall price level was "sticky," meaning prices did not adjust quickly to changes in demand, leading to prolonged periods of unemployment and underutilized resources.

The Great Recession of 2007-09 Illustrated the Situation Where a Negative