Asked by morgan lewallen on May 16, 2024
Verified
In terms of the aggregate demand and aggregate supply framework,the Great Depression can be viewed as a:
A) rightward shift of the aggregate demand curve.
B) rightward shift of the aggregate supply curve.
C) downward movement along the aggregate demand curve.
D) a leftward shift of the aggregate demand curve.
E) a leftward shift of the aggregate supply curve.
Aggregate Demand Curve
The aggregate demand curve represents the total quantity of all goods and services demanded by the economy at different price levels.
Aggregate Supply Curve
A graphical representation showing the relationship between the total production of goods and services in an economy and the overall price level.
- Identify the components that result in shifts within the aggregate demand and aggregate supply curves.
- Familiarize with the historical evolution of macroeconomic policies and their transformation over time, notably during severe economic recessions like the Great Depression.
Verified Answer
ER
emmanuel reynaMay 22, 2024
Final Answer :
D
Explanation :
The Great Depression is often characterized by a significant decrease in consumer spending and investment, which leads to a decrease in the demand for goods and services. This decrease in demand causes a leftward shift of the aggregate demand curve. As a result, firms decrease production to match the decrease in demand, which causes a leftward shift of the aggregate supply curve as well. However, it is primarily the leftward shift of the aggregate demand curve that causes the economic contraction associated with the Great Depression.
Learning Objectives
- Identify the components that result in shifts within the aggregate demand and aggregate supply curves.
- Familiarize with the historical evolution of macroeconomic policies and their transformation over time, notably during severe economic recessions like the Great Depression.