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Figure: Fiscal Policy and the End of the Great Depression
-(Figure: Fiscal Policy and the End of the Great Depression) Look at the figure Fiscal Policy and the End of the Great Depression. The period from 1933 through 1936 would seem to indicate that in the short run a moderate level of government deficit spending can _____ the unemployment rate.
A)reduce
B)increase
C)not affect
D)eliminate

Question

Use the following to answer questions :
Figure: Fiscal Policy and the End of the Great Depression 
-(Figure: Fiscal Policy and the End of the Great Depression) Look at the figure Fiscal Policy and the End of the Great Depression. The period from 1933 through 1936 would seem to indicate that in the short run a moderate level of government deficit spending can _____ the unemployment rate.
A)reduce 
B)increase 
C)not affect 
D)eliminate

Quizplus · Accepted Answer

As seen in the figure, during the period of 1933 to 1936, an increase in government deficit spending was followed by a decrease in the unemployment rate. Therefore, a moderate level of government deficit spending can reduce the unemployment rate in the short run.

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