Which of the following statements about the Great Depression is correct?
A) The 1929 stock market crash explains the lengthy duration of the Great Depression.
B) The severity of the economic downturn, if not its onset, was the result of perverse monetary, fiscal, and regulatory policies.
C) The sharp decreases in tariff rates and tax rates cushioned the downturn and limited it to three years.
D) The Great Depression indicates that monetary policy affects prices but exerts little impact on output.

Question

Quizplus · Accepted Answer

The severity of the economic downturn, if not its onset, was the result of perverse monetary, fiscal, and regulatory policies. This is a widely accepted view among economists and historians. The stock market crash of 1929 was undoubtedly a trigger but not the sole cause of the Great Depression. The policies adopted by the Federal Reserve, the Hoover Administration, and later the Roosevelt Administration aggravated the situation and prolonged the depression. Tariff rates and tax rates were not reduced significantly until the 1940s, long after the trough of the depression in 1933. Monetary policy also played a significant role in the depression, as evidenced by the sharp and persistent contraction of the money supply from 1929 to 1933.

Which of the Following Statements About the Great Depression Is