When the government pursued a “tight money” policy during the Great Depression, it caused aggregate demand...
When the government pursued a “tight money” policy during the Great Depression, it caused aggregate demand to decrease because it: Choose one:
A. reduced consumer spending and investment spending.
B. caused tax rates to decrease.
C. led to very high rates of inflation, which eroded household spending.
D. caused a rapid decline in exports to other countries.
E. led to an increase in stock prices and household wealth.
Homework Answers
Answer:
Correct option: E] led to an increase in stock prices and household wealth.
When the government pursued a “tight money” policy during the Great Depression, it caused aggregate demand to decrease because it led to an increase in stock prices and household wealth which in turn reduced consumer spending and investment spending.
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