The process of an economy adjusting from a recession back to potential GDP in the long run without any government intervention is known as
A)monetary policy.
B)an automatic mechanism.
C)"releasing sticky prices."
D)fiscal policy.

Question

Quizplus · Accepted Answer

An automatic mechanism refers to the natural process by which an economy adjusts from a recession back to potential GDP in the long run without any government intervention. This can occur as wages and prices adjust to balance supply and demand and as resources are reallocated to more productive uses. Monetary policy and fiscal policy involve deliberate government intervention to stabilize the economy, while "releasing sticky prices" is not a recognized term or concept.

The Process of an Economy Adjusting from a Recession Back