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) the tendency of the short-run aggregate supply curve to shift until it intersects the aggregate demand curve at potential GDP
E) an active approach to a recession or depression

Question

Quizplus · Accepted Answer

An active approach to a recession or depression involves government intervention in the economy, such as fiscal or monetary policy. While such intervention can help stabilize the economy in the short run, it may also interfere with the self-correcting mechanisms of the market and create unintended consequences. Therefore, it is considered inconsistent with a self-correcting economy.

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