During parts of the Roaring 20s, the stock market increased by 20 percent per year, and the overall economy grew by 40 percent over the course of the decade. In response, the government should have:

Question

Quizplus · Accepted Answer

The economy was already growing rapidly and the stock market was experiencing a boom, which could lead to inflationary pressures. Therefore, the government should have implemented contractionary fiscal policy measures, such as reducing government spending and raising taxes, in order to prevent an overheating of the economy and potential economic downturn.

During Parts of the Roaring 20s, the Stock Market Increased