According to the real business cycle theory, during a recession the demand for labour _______ and the supply of labour _______.
A)decreases; increases
B)decreases; does not change
C)does not change; decreases
D)increases; decreases
E)decreases; decreases

Question

Quizplus · Accepted Answer

During a recession, the demand for labor decreases as businesses reduce production, and the supply of labor increases as workers are laid off.

According to the Real Business Cycle Theory, During a Recession