Although the economy was in the Great Depression, the Hoover administration followed a fiscal policy of balancing the budget. A Keynesian would have found this policy
A.
inappropriate, because it probably would have inflationary consequences that might serve to further the people’s reluctance to hold money.
B.
appropriate, because it probably would have led to a significant increase in the money supply and thereby increased employment.
C.
appropriate, because it probably would have stimulated economic activity and helped end the depression.
D.
inappropriate, because it probably would further depress aggregate demand, economic activity, and employment.
Exam No：AP Macroeconomics Problem Set 3 Year：2024 Question No：APMacroeconomics2024AP0114
Answer:
D
Knowledge points:
5.1 Fiscal and Monetary Policy Actions in the Short Run
Solution:
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