Which of the following would occur as part of the automatic adjustment process in an economy with a recessionary gap?
A)rising prices
B)decreasing investment
C)increasing government purchases
D)falling tax rates
E)decreasing wages

Question

Quizplus · Accepted Answer

During a recessionary gap, automatic adjustments would include decreasing wages as employers seek to reduce costs due to lower demand for goods and services. This adjustment helps to eventually restore equilibrium in the economy by making it cheaper for businesses to employ labor, potentially leading to an increase in hiring and production.

Which of the Following Would Occur as Part of the Automatic