One of the assertions that Keynesians make when explaining the severity of the Great Depression in the U.S.is that
A)the economic collapse originated from the negative effect that the stock market crash had on individuals' wealth
B)investment spending responded negatively to huge increases in the real interest rate
C)vigorous use of expansionary fiscal policy early on could have reduced the severity of the economic downturn
D)in response to the stock market crash, the U.S. Fed imposed credit controls that were much too restrictive
E)none of the above

Question

Quizplus · Accepted Answer

Keynesians believe that the Great Depression could have been less severe if the government had implemented expansionary fiscal policies, such as increasing government spending and cutting taxes, to stimulate the economy. They argue that the initial government response to the depression was too focused on balancing the budget, which only worsened the economic downturn.

One of the Assertions That Keynesians Make When Explaining the Severity