Use the following to answer questions:
-(Figure: Fiscal Policy and the End of the Great Depression)Refer to Figure: Fiscal Policy and the End of the Great Depression.The period from 1939 to 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)Refer to Figure: Fiscal Policy and the End of the Great Depression.The period from 1939 to 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 graph shows that there was a large increase in government deficit spending from 1939-1943, which was accompanied by a decrease in the unemployment rate. This indicates that fiscal policy, specifically deficit spending, can be effective in reducing unemployment in the short run.

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