Which of the following is true?
A) The Great Depression re-enforces the view that raising taxes in the midst of a severe recession is a bad idea.
B) The Great Depression clearly indicates that a prolonged period of monetary contraction will keep inflation low and promote monetary stability.
C) The Great Depression illustrates that trade restrictions will protect domestic industry and save jobs.
D) The Great Depression demonstrates that the political incentive structure during a severe downturn will encourage politicians to avoid frequent policy changes.

Question

Quizplus · Accepted Answer

The Great Depression was characterized by high unemployment, low economic growth, and a deflationary spiral. In response, some policymakers raised taxes, which only worsened the economic situation. This experience supports the view that raising taxes during a recession is counterproductive and can prolong economic hardship.

Which of the Following Is True