Question

John Maynard Keynes believed that wages may be inflexible in the downward direction. Consequently, an economy Question 3 options: could get stuck in long-run equilibrium. could get stuck in a recessionary gap. could get stuck in an inflationary gap. would always produce more than Natural Real GDP

Answer 1

An economy could get stuck in a recessionary gap

Step-by-step explanation:

Keynes believed that wages may be inflexible in the downward direction and which would consequently cause an economy to get stuck in the recessionary gap. The recessionary gap happens when a country's real GDP is lower than it's gross domestic product at a state of full employment. It shows the difference between the actual and potential production in an economy. But with the actual being smaller or lower than the potential production.