Which of these changes was observed in the United States between 1929 and 1933?
A) The aggregate supply curve shifted inward with no change in the aggregate demand curve.
B) The aggregate demand curve shifted inward with no change in the aggregate supply curve.
C) The aggregate demand curve shifted outward with no change in the aggregate supply curve.
D) The aggregate supply curve shifted outward with no change in the aggregate demand curve.
E) The aggregate supply and demand curves both shifted outward.

Question

Quizplus · Accepted Answer

During the period between 1929 and 1933, the United States witnessed the Great Depression, which was caused by a severe reduction in aggregate demand. As a result, the aggregate demand curve shifted inward, leading to a decline in output, employment, and prices. The shift in aggregate supply could not have been responsible for the depression as it was primarily caused by a decrease in aggregate demand. Moreover, option E, which suggests an outward shift in both supply and demand curves, is also incorrect as it implies an increase in output and prices, which did not happen during the Great Depression.

Which of These Changes Was Observed in the United States