Multiple Choice
Use the following graph to answer the following questions.This graph depicts an economy where aggregate demand has decreased,with no change in either short-run aggregate supply (SRAS) or long-run aggregate supply (LRAS) .
-During the Great Depression,the aggregate price level and real gross domestic product (GDP) both decreased,as depicted in the graph.Unemployment increased to record levels.Which of the following best explains why this happened?
A) A sudden increase in oil prices caused inflation and a deep recession.
B) A stock market crash,large numbers of bank failures,an increase in tax rates,and a tight money supply caused a recession.
C) A rapid decline in housing prices led to problems in the loanable funds market and a recession.
D) A significant decline in military spending following the end of a war led to a recession.
E) A sharp recession followed the United States abandoning the gold standard.
Correct Answer:
Verified
Correct Answer:
Verified
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