Answered

From 1990 to 1995, the U.S. economy was in a recessionary gap. According to classical economists, which of the following should have occurred?

A. Interest rates should have fallen, which would increase consumer and investment spending.
B. Prices should have fallen, which would increase consumer spending.
C. All of the above should have occurred.
D. Wages should have fallen, which would cause more workers to be hired.



Answer :

GinnyAnswer

Final answer:

During a recessionary gap, classical economists believed that interest rates should fall to increase consumer and investment spending, along with prices falling to boost consumer spending.


Explanation:

According to classical economists during a recessionary gap:

  • Interest rates should have fallen, which would increase consumer and investment spending.
  • Prices should have fallen, which would further increase consumer spending.

Therefore, the correct option is all of the above should have occurred as per classical economic thought.


Learn more about Classical economists' views on recessionary gaps here:

https://brainly.com/question/34036146


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