Each of the following is a fact about the Great Depression except
A) from full employment in 1929, real GDP fell until it was nearly 40 percent below potential output by 1933.
B) the price level fell substantially: the deflation rate was about 10 percent in 1931.
C) Nominal interest rates decreased from over five percent in 1929 to about one percent by 1934.
D) real interest rates decreased from nearly 13 percent in 1929 to four percent in 1931.

Question

Quizplus · Accepted Answer

Real interest rates actually increased during the Great Depression, not decreased. The decrease in nominal interest rates combined with deflation led to an increase in real interest rates.

Each of the Following Is a Fact About the Great