The spending hypothesis suggests that the Great Depression was caused by a:
A) leftward shift in the IS curve.
B) rightward shift in the IS curve.
C) leftward shift in the LM curve.
D) rightward shift in the LM curve.

Question

Quizplus · Accepted Answer

The spending hypothesis suggests that the Great Depression was caused by a decrease in aggregate demand, which is represented by a leftward shift in the IS curve. This shift indicates a reduction in spending, investment, and consumption, leading to a contraction in economic activity.

The Spending Hypothesis Suggests That the Great Depression Was Caused