Which of the following had the greatest impact in pulling the U.S.economy out of the Great Depression?
A)the economy's natural tendency to contract toward potential output
B)the federal government's aggressive policy of tax cuts
C)the federal government's aggressive policy of monetary stimulus
D)a precipitous drop in aggregate demand
E)the increased spending brought on by World War II

Question

Quizplus · Accepted Answer

The increased spending and mobilization efforts brought on by World War II had the greatest impact in pulling the US economy out of the Great Depression. This led to an increase in demand for goods and services, which stimulated economic growth and created jobs. Additionally, the federal government's spending on the war effort provided a significant fiscal stimulus to the economy. While other factors, such as the New Deal policies and monetary stimulus efforts, may have contributed to the recovery, it was the massive spending during World War II that ultimately brought the US out of the Great Depression.

Which of the Following Had the Greatest Impact in Pulling