In the In the News article in the text titled "Fiscal Policy in the Great Depression," President Hoover's prescription in 1932 was for cutbacks in government spending and higher taxes.He was effectively
A)Targeting the goal of full employment rather than reduction of inflation.
B)Decreasing the level of AD.
C)Applying the Keynesian prescription for handling a depression.
D)Following the classical approach of laissez faire.

Question

Quizplus · Accepted Answer

President Hoover's prescription for cutbacks in government spending and higher taxes would decrease the level of aggregate demand (AD), which is contrary to the Keynesian approach that suggests increasing AD to combat a depression.

In the in the News Article in the Text Titled