Use the Following Graph to Answer the Next Six Questions

question 96

Multiple Choice

Use the following graph to answer the next six 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 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.

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Definitions:

Sociological Imagination

The ability to see the relationship between individual experiences and the larger society, understanding how societal forces shape personal life.

Quality of Mind

Concerns the cognitive attributes that allow an individual to engage thoughtfully and adaptively with their environment and experiences.

Global Village

A term that describes how the world has been made smaller and more interconnected by electronic communication, leading to an increase in the awareness of global issues.

McLuhan

A theorist known for his work on media theory, famously coining the phrase "the medium is the message."