Typically, the economy recovers fairly quickly from a recession. Why did this NOT happen in the United States during the Great Depression?
What will be an ideal response?
The 25% decline in the price level from 1930-1933 triggered a debt deflation. The loss of net worth increased adverse selection and moral hazard problems in the credit markets and increased and prolonged the economic contraction.
Economics
You might also like to view...
How have the trade policies of developed countries discouraged new exports of less-skilled-labor-intensive manufactured goods by developing countries?
What will be an ideal response?
Economics
If fixed cost rises,
A. the profit-maximizing level of output would decrease. B. the profit-maximizing level of output would not change. C. marginal cost rises. D. variable cost falls.
Economics