Why was the stock market crash of 1929 a disaster for the economy?
(a) Through the "wealth effect," investors lost paper wealth and consequently
reduced their spending on goods and services. This led to cutbacks in
production and jobs.
(b) Businessmen became pessimistic about the future and reduced spending on
plants and equipment, thus causing reduced production and increased layoffs
in the capital-goods sector of the economy.
(c) The crash revealed a flawed structure of credit and weak system of banks
and other financial institutions in the U.S.
(d) All of the above are correct
(d)
You might also like to view...
Which of the following characteristics is essential if a good is to be efficiently provided by a market economy?
a. The good should be subject to overuse. b. The good should be subject to the free rider problem. c. The good should be a common resource. d. The good should be excludable and rival in consumption
Which of the following is NOT a primary determinant of the number of jobs in a nation in the long run?
A) Age and size of the population B) Labor market policies C) Macroeconomics policies D) International trade