Analysis of the Great Depression indicates thata. even though monetary and fiscal policies were highly expansionary, they were unable to offset the economic downturn.b. the depth of the economic plunge, if not its onset, was the result of monetary, fiscal, and regulatory policies.c. a reduction in tax rates could not prevent the economic downturn from spiraling into a depression.d. even though monetary policy was expansionary, restrictive fiscal policy dominated during the 1930s.0000

The objective of the question is to understand the economic conditions and policies during the Great…

Answered: Analysis of the Great Depression…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In early 2020, some commentators warned that the unprecedented global pandemic crisis would lead to Greater Depression. This type of prediction led many to revisit the Great Depression in the 1930s to see if there is any parallel. At the time, no one could rule out the possibility of another depression. Yet many economists believed that the very mistakes that had led to the Great Depression could be avoided this time. What are the policy mistakes that had led to the Great Depression?a. Fed failed to follow Walter Bagehot’s dictum that during a financial panic, central banks should lend freely to solvent firms against good collateral at penalty rates.b. Fed allowed the money supply to fall by one-fourth, which likely caused the deflation in the early 1930s.c. Fiscal policy was tightened to pursue a balanced budget.d. The U.S. government did not abandon the gold standard until 1933 (the gold standard constrains the monetary policy).e. All of the above are thought to be the policy…
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