When Classical economists of the 1930s looked at the Great Depression, they:
A. thought it was a result of prices adjusting too quickly.
B. suggested wages were too flexible.
C. blamed it on activist fiscal and monetary policies.
D. lacked a good explanation of why it was happening.
Answer: D
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A technological improvement lowers the cost of producing coffee. At the same time, consumers' preferences for coffee increase. The equilibrium price of coffee will
A) rise. B) fall. C) remain the same. D) rise, fall, or stay the same, depending on the relative size of the shifts in the demand and supply curves.
The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2008, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2009, the price of pizzas increased to $14 each, while the price of jeans and milk remained the same. Between 2008 and 2009, a typical family's cost of living:
A. remained the same. B. decreased by 9 percent. C. increased by 40 percent. D. increased by 9 percent.