Keynesian Economists Believed That the Prolonged Unemployment of the 1930s

question 56

Multiple Choice

Keynesian economists believed that the prolonged unemployment of the 1930s was the result of

• A) the sharp reduction in the supply of money during 1929-1933 and another monetary contraction in 1938.
• B) the high interest rates of the 1930s.
• C) the double-digit inflation of the 1930s.
• D) insufficient aggregate demand and the failure of market forces to direct the  economy back to full employment.

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Definitions:

Great Depression

A severe worldwide economic downturn that took place during the 1930s, beginning with the U.S. stock market crash of 1929 and leading to widespread economic hardship globally.

Gold Standard

A monetary setup where the value of a nation's currency is directly tied to the value of gold.

Gold Stock

A quantity of gold held by a central bank or government to support the value of its currency and as a form of investment.

Money Supply

The sum of all financial assets in an economy, including cash, coins, and the amounts in checking and savings accounts at a given point in time.