The decline in output at the onset of the Great Depression was caused primarily by
A) a positive demand shock
B) a negative demand shock
C) a positive supply shock
D) a negative supply shock
E) simultaneous shocks to supply and demand

Question

Quizplus · Accepted Answer

The decline in output at the onset of the Great Depression was caused primarily by a negative demand shock, which led to a decrease in consumer spending and investment, and thus a decrease in overall demand for goods and services. This decline in demand led to a contraction in production and employment, exacerbating the economic downturn.

The Decline in Output at the Onset of the Great