The "Yes - Markets Self-Adjust" camp argues that in a recessionary gap, all of these market adjustments will happen except,
A) price adjustments in the loanable funds market fix the saving problem for Say's Law.
B) falling wage rates decrease the quantity of labour demanded.
C) falling interest rates increase business investment.
D) falling output prices increase aggregate quantity demanded.
E) falling output prices increase net exports.

Question

Quizplus · Accepted Answer

Falling wage rates would actually increase the quantity of labor demanded, not decrease it. Lower wages make hiring more attractive to employers, leading to an increase in labor demand.

The "Yes - Markets Self-Adjust" Camp Argues That in a Recessionary