The Great Depression Showed That the Short-Run Aggregate Supply Curve

question 230

Multiple Choice

The Great Depression showed that the short-run aggregate supply curve and the aggregate demand curve

• A) must always intersect at full employment.
• B) can intersect at output levels below full employment.
• C) must intersect at output levels above full employment.
• D) can never lead to deflation.

---

Definitions:

Government Bonds

Financial securities issued by a government to finance its budget deficits and various public sector projects.

Discount Rate

The interest rate charged by central banks for short-term loans to commercial banks, influencing monetary policy and economy liquidity.

Required Reserve Ratio

The fraction of deposits that a bank is legally required to hold as reserves, either in its own vaults or with a central bank.

Government Spending

Expenditures made by the government for its operations, provision of public services, or interventions in the economy.