Use the following to answer questions:
-(Figure: Fiscal Policy and the End of the Great Depression) Refer to Figure: Fiscal Policy and the End of the Great Depression. The period from 1933 through 1936 would seem to indicate that in the short run a moderate level of government deficit spending can _____ the unemployment rate.
A) reduce
B) increase
C) not affect
D) eliminate

Question

Use the following to answer questions: 
-(Figure: Fiscal Policy and the End of the Great Depression) Refer to Figure: Fiscal Policy and the End of the Great Depression. The period from 1933 through 1936 would seem to indicate that in the short run a moderate level of government deficit spending can _____ the unemployment rate.
A) reduce 
B) increase 
C) not affect 
D) eliminate

Quizplus · Accepted Answer

From the graph, we can see that during the period of government deficit spending from 1933 to 1936, the unemployment rate decreased. This indicates that moderate government deficit spending can reduce the unemployment rate in the short run. Therefore, the best choice is A, reduce.

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