Economist Robert Gordon has written the following: During 1939, more than any other year in the dismal

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Economist Robert Gordon has written the following:
During 1939, more than any other year in the dismal Depression decade, the American economy exhibited every evidence of slipping into a low-employment trap. Prices were on a plateau, with no tendency to decline, despite high unemployment.
a. What does Gordon mean by a “low-employment trap”? 

b. Why might the fact that prices were not declining despite high unemployment lead Gordon to conclude that the economy was in a low-employment trap?

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Money Banking And The Financial System

ISBN: 1801

3rd Edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

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