Which of the following is not consistent with a self-correcting economy?
A)Falling wages that correct a recessionary gap
B)Falling prices that correct a recessionary gap
C)Rising prices that correct an expansionary gap
D)Tendency of the short-run aggregate supply to shift until it intersects aggregate demand at potential GDP
E)An active approach to a recession or depression

Question

Quizplus · Accepted Answer

An active approach to a recession or depression is not consistent with a self-correcting economy, as the economy is expected to correct itself without intervention from outside forces. Interventions such as stimulus spending or monetary policy actions are not part of a self-correcting economy. The other choices listed are all consistent with a self-correcting economy.

Which of the Following Is Not Consistent with a Self-Correcting