Asked by Joseph Hernandez on Jun 04, 2024
Verified
The major cause of the Depression of the 1930s according to the Keynesian model was
A) increased government spending.
B) reduced foreign exports.
C) reductions in investment.
D) a decline in the money supply.
Keynesian Model
An economic theory stating that active government intervention is necessary to manage economic fluctuations and stimulate demand during downturns.
Money Supply
The sum of all funds available in an economy, including cash, coins, and checking and savings account balances, at a particular point in time.
Foreign Exports
Products or services that are manufactured in one nation and purchased by consumers in a different country.
- Describe the causes and outcomes of the Great Depression according to Keynesian theory.
Verified Answer
GN
Geraldine NkwainJun 09, 2024
Final Answer :
C
Explanation :
According to the Keynesian model, the major cause of the Depression of the 1930s was reductions in investment. This reduction led to a decrease in aggregate demand, which caused a decrease in production and employment, ultimately leading to a vicious cycle of decreased spending and decreased investment.
Learning Objectives
- Describe the causes and outcomes of the Great Depression according to Keynesian theory.