Recessions do not last forever because
A)workers get tired of being unemployed.
B)firms eventually have incentives to increase employment and produce more output.
C)government steps in and boosts spending back to long-run levels.
D)central banks have control over the money supply.

Question

Quizplus · Accepted Answer

Firms eventually have incentives to increase employment and produce more output. During a recession, firms may be hesitant to hire new workers or to expand production because of decreased demand for their goods or services. However, as the economy begins to recover, firms will see increased demand for their products and services, prompting them to hire more workers and increase output to meet that demand. This process helps to pull the economy out of a recession.

Recessions Do Not Last Forever Because