In the In the News article in the text titled "Fiscal Policy in the Great Depression," President Hoover's prescription in 1932 was for cutbacks in government spending and higher taxes.He was effectively
A)Targeting the goal of full employment rather than reduction of inflation.
B)Decreasing the level of AD.
C)Applying the Keynesian prescription for handling a depression.
D)Following the classical approach of laissez faire.

Question

Quizplus · Accepted Answer

Hoover's actions of cutting government spending and raising taxes would decrease aggregate demand (AD), not stimulate employment or follow Keynesian economics, which advocates for increased government spending during a depression. His approach was more aligned with reducing government intervention, but his specific actions do not align with laissez-faire principles, which would oppose both tax increases and spending cuts.

In the in the News Article in the Text Titled