If a market economy was in a recession, which of the following would help direct it back toward the full employment rate of output?
A) an increase in the rate of inflation
B) lower resource prices and lower real interest rates
C) higher resource prices and higher real interest rates
D) a decrease in the natural rate of unemployment

Question

Quizplus · Accepted Answer

Lower resource prices and real interest rates would stimulate demand in the short run, increasing output and potentially bringing the economy closer to full employment. Increasing inflation rates, higher resource prices, and higher real interest rates could potentially harm the economy in the long run. Decreasing the natural rate of unemployment would be beneficial in the long run but would not directly address the recession.

If a Market Economy Was in a Recession, Which of the Following