(Consider This) The U.S. recession that occurred in 2008 and 2009 represented a case where
A) government policy intervention effectively offset the negative demand shock and minimized the effects on output and employment.
B) prices were somewhat ﬂexible, so the impact of the demand shock was felt about the same in terms of price and output changes.
C) prices were relatively ﬂexible, minimizing the impact on total output and employment.
D) prices were relatively sticky and most of the impact was on total output.

Question

Quizplus · Accepted Answer

The U.S. recession that occurred in 2008 and 2009 was characterized by relatively sticky prices, which meant that the impact of the demand shock was felt mostly in terms of changes in total output, rather than changes in prices. As a result, the recession had a significant impact on employment and output, and government policy intervention was needed to mitigate the negative effects.

(Consider This) the U