A business cycle recovery that doesn't reach its long-term trend can lead to A

Business Dec 23, 2020

A business cycle recovery that doesn't reach its long-term trend can lead to

A. hyperinflation.

B. its natural unemployment rate.

C. lower cyclical unemployment.

D. a double-dip recession.

Expert Solution

The correct option is (D). A double-dip recession.

Usually, in the business cycle after reaching point trough, the economy starts its recovery path. But, if the recovery path doesn't reach its king-term trend path of expansion then it can be inferred that recovery in the economy is only short-lived and once again the economy falls into recession. Thus, at this time period, the economy falls into a double-dip recession.

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