Which of the following is the aggregate supply explanation of the slow U.S. recovery?
A) The banking crisis has increased the natural level of employment.
B) The banking crisis has decreased the natural rate of unemployment.
C) The banking crisis has decreased the natural level of output.
D) The banking crisis has increased the natural rate of interest.
E) The banking crisis has increased the level of productivity.

Question

Quizplus · Accepted Answer

The banking crisis has decreased the natural level of output, which means that the potential level of output the economy can produce has been reduced. This is due to factors such as reduced investment and decreased availability of credit for businesses. As a result, the economy is unable to produce at its full potential, leading to slower economic growth and a slower recovery.

Which of the Following Is the Aggregate Supply Explanation of the Slow