Use the Following Graph to Answer the Following Questions

question 47

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.

---

Definitions:

1912

A year in the early 20th century notable for several significant historical events, including the sinking of the Titanic.

Sixteenth Amendment

An amendment to the U.S. Constitution, ratified in 1913, granting Congress the power to levy an income tax.

Tax Rate

The percentage at which an individual or corporation is taxed by the government, which can vary based on income level, type of goods, or activities.

Industrial World

Societies or regions that have undergone industrialization, characterized by significant technological advancement and a focus on manufacturing and production.