Economies usually face recessions for long periods of time because:
A)the pessimism in the economy slows down the process of adjustment.
B)wages and prices are rigid in nature.
C)firms tend to streamline their operations every year.
D)governments tend to avoid making tough decisions.
E)wages fall faster than the price level.

Question

Quizplus · Accepted Answer

Recessions often occur when there is a decrease in demand for goods and services, leading to lower levels of production and employment. However, because wages and prices are often inflexible and do not adjust quickly to changes in demand, firms may not be able to lower their costs quickly enough to remain profitable. This can lead to a prolonged recession as firms struggle to adjust to the new economic conditions.

Economies Usually Face Recessions for Long Periods of Time Because