What Prompted the Large Increase in Tax Rates in 1932

question 79

Multiple Choice

What prompted the large increase in tax rates in 1932 in the midst of an economic recession?

• A) concern that inflation would rise due to increases in real output and aggregate demand
• B) expansionary fiscal policy designed to stimulate aggregate demand
• C) the Keynesian view that taxes should be increased during a recession
• D) the view that the federal government should maintain a balanced budget