If the economy is self-regulating,then it follows that
A) recessionary and inflationary gaps are temporary economic states.
B) wages will fall when the economy is in a recessionary gap.
C) wages will rise when the economy is in an inflationary gap.
D) the economy is always in long-run equilibrium.
E) a,b and c

Question

Quizplus · Accepted Answer

The concept of a self-regulating economy suggests that market mechanisms adjust to correct imbalances, meaning recessionary and inflationary gaps are temporary. Wages are expected to fall in a recessionary gap to restore equilibrium (increasing employment) and rise in an inflationary gap to cool down the economy, aligning with options A, B, and C.

If the Economy Is Self-Regulating,then It Follows That