How does an economy typically self-correct from a recessionary output gap in the long run?

An economy can self-correct from a recessionary output gap, which happens when actual production is less than what it could potentially be, by adjusting over time. When there is a recession, many businesses may not make enough money, leading to lower wages and less spending by consumers. As wages decrease, this can encourage businesses to hire more people since they can pay lower wages, which helps reduce unemployment. Additionally, lower prices can attract consumers back into the market, increasing demand for goods and services. For example, if a town experiences a recession and local shops lower their prices, more people might start to buy, helping the economy gradually recover.