Until the Great Depression of the 1930s,the prevailing theory on the price level was the ________ theory.
A) rational expectations/supply
B) pendular
C) crude quantity
D) sunspot
E) Keynesian

Question

Quizplus · Accepted Answer

The prevailing theory on the price level before the Great Depression was the crude quantity theory, which argued that the price level was determined solely by the quantity of money in circulation. This theory was challenged by the Keynesian approach during the Great Depression, which emphasized the role of aggregate demand in determining prices. The other choices (rational expectations/supply, pendular, and sunspot) were theories that emerged after the Great Depression.

Until the Great Depression of the 1930s,the Prevailing Theory on the Price