If the government does not react to a recession:
A)the economy will remain out of its long-run equilibrium indefinitely.
B)the economy will recover,but much more slowly.
C)voters and consumers are likely to be happy with less government interference.
D)None of these is true.

Question

Quizplus · Accepted Answer

If the government does not react to a recession, the economy will eventually recover but at a slower pace than if government intervention had occurred. This is because without government action to stimulate growth, the economy may stay in a state of low demand and low production, resulting in a slower recovery. A and C are incorrect because the economy can eventually return to its long-run equilibrium without government intervention, and voter and consumer satisfaction is not necessarily related to government intervention in the economy.

If the Government Does Not React to a Recession