If there is no policy action in an economy that is producing an output below its full-employment level, then
A)the output returns to full-employment level quickly.
B)the price level declines slowly.
C)the price level rises quickly.
D)the output stays below full-employment for a short period, then rises quickly.

Question

Quizplus · Accepted Answer

In an economy producing below its full-employment level without policy intervention, the price level typically declines slowly due to decreased demand for goods and services, which can eventually help in restoring equilibrium.

If There Is No Policy Action in an Economy That