Which of the following statements is most consistent with the view that the economy has a self-corrective mechanism?
A)When the economy is in a recession,it will remain there until the government steps in to bring the economy out of the recession.
B)When the economy is in a recession,falling resource prices and declining interest rates will direct the economy back to full employment.
C)During economic booms,interest rates will fall,causing the economy to fall into a recession.
D)In a market economy,resource prices,such as wages,can only increase;they can never decrease.

Question

Quizplus · Accepted Answer

The statement "When the economy is in a recession, falling resource prices and declining interest rates will direct the economy back to full employment" is most consistent with the view that the economy has a self-corrective mechanism. This statement suggests that the market forces of falling resource prices and declining interest rates will work to correct the economic downturn without government intervention.

Which of the Following Statements Is Most Consistent with the View