During the Great Depression, Fiscal Policy Focused Primarily on

question 45

Multiple Choice

During the Great Depression, fiscal policy focused primarily on

• A) keeping taxes low.
• B) raising taxes during an economic expansion and lowering taxes during a recession.
• C) trying to balance the federal budget.
• D) running budget deficits in order to stimulate real output and GDP.

---

Definitions:

Anchoring And Adjustment

A cognitive heuristic where individuals rely too heavily on an initial piece of information (anchor) when making decisions, adjusting insufficiently from that anchor.

Frame Dependence

The tendency of individuals to make different (and potentially inconsistent) decisions depending on how a question or problem is framed.

Aversion To Ambiguity

A preference to avoid uncertain or ambiguous situations, often reflected in decision-making processes.

Clustering Illusion

The cognitive bias of seeing patterns in random events.