Each of the following is a possible shock that triggered the Great Depression except
A) the stock market crash of 1929.
B) an increase in imports caused by a sharp increase in the marginal propensity to import.
C) a downward shift in the baseline level of consumption spending caused by reduced wealth and greater uncertainty.
D) a downward shift in the baseline level of investment spending caused by a decrease in investment in residential housing.

Question

Quizplus · Accepted Answer

The Great Depression was primarily triggered by factors such as the stock market crash of 1929 (A), a decrease in consumption spending due to reduced wealth and uncertainty (C), and a decrease in investment, including in residential housing (D). An increase in imports caused by a sharp increase in the marginal propensity to import (B) is not typically cited as a trigger for the Great Depression. The main issues were related to domestic economic factors like asset bubbles, banking crises, and declines in spending and investment, rather than a sudden increase in imports.

Each of the Following Is a Possible Shock That Triggered