Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased production of consumer goods
B
Higher levels of unemployment
C
Decreased government intervention
D
Economic growth due to natural market adjustments
Understanding the Answer
Let's break down why this is correct
Answer
When Zeta's economy is in a recessionary gap, it means that the economy is not producing as much as it could, leading to higher unemployment and lower spending. People may lose their jobs or have less money to spend, which causes businesses to earn less. This can create a cycle where businesses cut back even more, leading to further job losses and reduced economic activity. For example, if a factory is not getting enough orders, it might lay off workers, which means those workers will spend less money in their community, hurting local shops. Overall, a recessionary gap can lead to a slowdown in economic growth and lower living standards for many people.
Detailed Explanation
In a recessionary gap, the economy is not producing enough goods and services. Other options are incorrect because Some might think that a recession means more goods are made; People might believe that the government does less during a recession.
Key Concepts
Recessionary Gaps
Unemployment Rates
Production Possibilities Curve
Topic
Understanding Recessionary Gaps
Difficulty
easy level question
Cognitive Level
understand
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