Question

Question: Provide a well-written essay of approximately 150 words. Select at least three policies, proposed actions, or actions taken by the presidents (Hoover or FDR) that would have changed the AD curve. You can choose any combination that you want to comment on (2 from one and one from the other, all three from one, whatever). Explain what would have been the impact on the AD curve and why. Express your opinion, with analysis in mind, not emotion.

Background Context:

Lawrence Reed presents an interesting (controversial to some) view of the Great Depression. In viewing this video and referring to the pdf file, keep in mind the policies, actions proposed, and actions taken by either President Hoover or President FDR that would have changed the AD curve. Explain why and indicate if the impact on the AD curve would have increased or decreased the curve.

Answer 1

Hoover herbert response was substantieated by expansionary fiscal policy and combination of refroms like higher wages. The government funding for additional slending came through 2 percent taxes on usage of checks which promoted cash usage and banks ran out of cash supply causing huge deficit and worse effects of depression. Also constant high wages cajsed high unemployment as businesses could not afford such high cash outflow. Allin allthe the action to alleviate economy from recession failed massively and further created dent trap and Depression kind of atmosphere with liquidity crunch pushing the AD Curve leftwards or in other words Aggregate demand decreased and subsequently real GDP plunged.

His inadequacy to revive economy caused him tooose 1932 elections and consequently Franklin Roosevelt was elected who briught in series of reforms under "First New Deal." seeies of new job refirms and support was established to curb unemployment and delicensed industries and eliminate laws if cutthroat competition and also abolished gold standards to make sure economy bounces back with liquidity and consumption.