All of the following events are consistent with the spending hypothesis as contributing to the Great Depression except:
A) the decline in investment spending on housing because of a decline in immigration in the 1930s.
B) the decline in consumption spending caused by the stock market crash of 1929.
C) fiscal policy to reduce the budget deficit by raising taxes in 1932.
D) the 25-percent reduction in the money supply between 1929 and 1933.

Question

Quizplus · Accepted Answer

The spending hypothesis focuses on declines in spending (investment and consumption) and fiscal policies affecting spending as key factors in the Great Depression. A reduction in the money supply, while significant, is more directly related to monetary policy and its effects on the economy rather than the spending hypothesis specifically.

All of the Following Events Are Consistent with the Spending