Which of the following explains why the Great Depression did not end sooner?
A) An increase in the nominal money stock.
B) An increase in the price level.
C) The presence of deflation.
D) A relatively passive use of monetary policy.
E) Both C and D.

Question

Quizplus · Accepted Answer

The presence of deflation (option C) perpetuated the downward spiral of prices, wages, and employment, making recovery difficult. Also, the relatively passive use of monetary policy (option D) by the Federal Reserve further exacerbated the economic downturn. Both of these factors contributed to the length and severity of the Great Depression, delaying its end.

Which of the Following Explains Why the Great Depression Did