How did maintaining the gold standard deepen the severity of the Great Depression?

What will be an ideal response?

A key reason is that to remain on the gold standard, central banks often had to take actions that contracted production and employment rather than expanding it. The Fed attempted to stem the outflows by raising the discount rate because higher interest rates would make financial investments in the United States more attractive to foreign investors. Higher interest rates, though effective in stemming the gold outflow and keeping the United States on the gold standard, were the opposite of the lower interest rates needed to stimulate domestic spending.

Economics

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Countries that trade a small amount with a single foreign country tend to float their exchange rate to the foreign country's currency

Indicate whether the statement is true or false

Economics

Describe how a central bank can increase aggregate demand by influencing expectations

What will be an ideal response?

Economics