An economy eliminates a recessionary gap by reducing wages and prices.

Name: An economy eliminates a recessionary gap by reducing wages and prices.
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Question

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When wages and prices are reduced, the cost of production decreases, making it more profitable for firms to produce goods and services. As a result, they will increase their output, creating more jobs and reducing unemployment. The increase in output and employment will eventually close the recessionary gap.

An Economy Eliminates a Recessionary Gap by Reducing Wages and Prices