An economy experiences a recessionary gap.As the economy adjusts to full employment,the money wage rate

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In a recessionary gap, there is excess supply of goods and services, causing firms to lower prices, which lowers their revenue and profits. To maintain their profit level, firms reduce production and labor, leading to higher unemployment. As a result of high unemployment and excess supply of labor, workers are willing to accept lower wages. Therefore, as the economy adjusts to full employment, the money wage rate falls, shifting the aggregate supply curve rightward.

An Economy Experiences a Recessionary Gap