Prior to the Great Depression, the Dominant Economic View Held

question 117

Multiple Choice

Prior to the Great Depression, the dominant economic view held that

• A) fiscal policy could effectively eliminate a recessionary gap and return the economy to its potential output.
• B) economies should be able to reach full employment through a process of self-correction.
• C) monetary policy should be used to move the economy back to its potential output because it was more immediate than fiscal policy.
• D) any movement away from potential output was due to either an excess aggregate demand or an excess aggregate supply.