In terms of the aggregate demand and supply framework, how can the Great Depression be viewed?
A) as a rightward shift of the aggregate demand curve
B) as a rightward shift of the aggregate supply curve
C) as a leftward shift of the aggregate demand curve
D) as a leftward shift of the aggregate supply curve

Question

In terms of the aggregate demand and supply framework, how can the Great Depression be viewed?  
A) as a rightward shift of the aggregate demand curve 
B) as a rightward shift of the aggregate supply curve 
C) as a leftward shift of the aggregate demand curve 
D) as a leftward shift of the aggregate supply curve

Quizplus · Accepted Answer

The Great Depression can be viewed as a leftward shift of the aggregate demand curve. The collapse of the stock market in 1929 reduced people's confidence, leading to a decrease in consumption and investment. The reduction in consumer spending and investment led to a decrease in aggregate demand, causing a decline in production, employment, and prices. As a result, the economy entered into a prolonged period of depression.

In Terms of the Aggregate Demand and Supply Framework, How