With regard to the business cycle, most modern economists believe that
A) once a recession starts, market forces are incapable of preventing the economy from plunging deeper and deeper into a depression.
B) market economies will experience lengthy periods of recession pretty much regardless of what policy makers do.
C) the economy's self-corrective mechanism will quickly restore full employment regardless of the choices made by policy makers.
D) lower real interest rates and reductions in real resource prices will help direct an economy out of recession.

Question

Quizplus · Accepted Answer

Most modern economists believe that lower real interest rates and reductions in real resource prices will help direct an economy out of recession. This is because lower interest rates can stimulate consumer and business spending, while lower resource prices reduce production costs and increase profit margins, leading to increased investment and employment. However, it is important to note that the economy's self-corrective mechanism can take time to fully restore full employment and economic growth, and policy makers can play a role in either speeding up or slowing down the recovery process through their policy choices.

With Regard to the Business Cycle, Most Modern Economists Believe