In the Initial Stages of the Great Depression, Fiscal Authorities

question 55

Multiple Choice

In the initial stages of the Great Depression, fiscal authorities responded to the decline in
Output by

• A) increasing government purchases to stimulate aggregate demand.
• B) raising taxes to increase government revenue.
• C) lowering taxes to encourage spending.
• D) subsidizing private production to create jobs.

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Definitions:

Utility Maximization

The process by which consumers allocate their income in a way that maximizes their overall satisfaction.

Rules of Thumb

Simple, general principles or guidelines that are used to make decision-making quicker, albeit less precise, often based on practical experience rather than theory.

Decision Making

Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Biases

Systematic patterns of deviation from norm or rationality in judgment, where particular feelings or opinions influence decision-making.