Asked by Yvette Casarrubias on Apr 29, 2024
Verified
Which of the following statements supports the passive approach to close a recessionary gap?
A) It is likely that policies will be subject to time lags.
B) Prolonged unemployment may cause the economy's potential real GDP to fall.
C) Workers' skills may grow rusty during a prolonged recession.
D) It is likely that unemployed workers will drop out of the labor force.
E) Firms may neglect their capital stock during a prolonged recession.
Passive Approach
A management strategy that seeks to track or replicate the performance of a market index or benchmark, rather than attempting to outperform it.
Recessionary Gap
The difference between the actual output of an economy and the output it could produce at full employment.
Time Lags
The delay between the initiation of a process or an action and its effect or result.
- Identify the differences between active and passive policy measures and understand their impact on economic conditions.
Verified Answer
Learning Objectives
- Identify the differences between active and passive policy measures and understand their impact on economic conditions.
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