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Figure: Fiscal Policy and the End of the Great Depression
-(Figure: Fiscal Policy and the End of the Great Depression) Look at the figure Fiscal Policy and the End of the Great Depression. The period from 1939 through 1943 would seem to indicate that in the short run a large increase in government deficit spending can _____ the unemployment rate.
A)reduce
B)increase
C)not affect
D)reduce or increase

Question

Use the following to answer questions :
Figure: Fiscal Policy and the End of the Great Depression 
-(Figure: Fiscal Policy and the End of the Great Depression) Look at the figure Fiscal Policy and the End of the Great Depression. The period from 1939 through 1943 would seem to indicate that in the short run a large increase in government deficit spending can _____ the unemployment rate.
A)reduce 
B)increase 
C)not affect 
D)reduce or increase

Quizplus · Accepted Answer

The figure shows that during the period from 1939 through 1943, when government deficit spending increased significantly, the unemployment rate decreased. This indicates that in the short run, a large increase in government deficit spending can reduce the unemployment rate.

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