-Refer to Figure 13.7. Reliance on the economy's internal adjustment process for the elimination of the output gap shown in the diagram can take a long time because:

Question

Quizplus · Accepted Answer

All of the options provided (A, B, C) are reasons why relying on an economy's internal adjustment process to eliminate an output gap can be slow. Wage rates, production costs, and inflation (along with expectations of inflation) may all adjust downward slowly, making the internal adjustment process lengthy.