Imagine you own a business and that during the next recession you lay off 20 percent of your workforce. Once economic activity picks up and your sales begin to increase, why might you not immediately start rehiring workers?
A. Before rehiring you would like to make sure that this economic expansion lasts.
B. Due to inflation that occurs during an economic recovery, you will have to pay higher wages to new workers
C. To better protect your self from a future recession, you would like to use more capital intensive technology
D. You would like to recover your profit that you lost during the recession and would not like to increase labor cost.
Answer: A