What prompted the large increase in tax rates in 1932 in the midst of an economic recession?
A) concern that inflation would rise due to increases in real output and aggregate demand
B) expansionary fiscal policy designed to stimulate aggregate demand
C) the Keynesian view that taxes should be increased during a recession
D) the view that the federal government should maintain a balanced budget

Question

Quizplus · Accepted Answer

The large increase in tax rates in 1932 was prompted by the view that the federal government should maintain a balanced budget, despite the economic recession. This policy is known as fiscal conservatism, which emphasizes the importance of keeping government spending and taxation low in order to maintain economic stability.

What Prompted the Large Increase in Tax Rates in 1932