A depression economy has considerable slack; therefore
A) unemployment is high.
B) there is no excess plant capacity.
C) all resources are being used efficiently.
D) there is an increase in aggregate price levels.

Question

Quizplus · Accepted Answer

In a depression economy, there is significant unemployment because there is a lot of unused capacity and resources. Therefore, the best choice is A). B) and C) are not correct because a depression economy does have excess plant capacity and resources are not being used efficiently. D) is also not correct because a depression economy typically experiences a decrease in aggregate price levels due to lower demand.

A Depression Economy Has Considerable Slack; Therefore