Which of the following was true of fiscal policy during the Great Depression?
A) The federal government generally ran a budget surplus and this reduced aggregate demand.
B) The federal government persistently balanced its budget during the 1930s.
C) Government spending was reduced as a share of GDP and budget deficits were small.
D) Government spending increased as a share of GDP but budget deficits were relatively small (generally less than 4 percent of GDP).

Question

Quizplus · Accepted Answer

During the Great Depression, the federal government increased its spending as a share of GDP through programs such as the New Deal, but budget deficits were still relatively small, generally less than 4 percent of GDP. This expansionary fiscal policy helped to increase aggregate demand and stimulate economic growth.

Which of the Following Was True of Fiscal Policy During