ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to dominate global trade
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to stabilize the economy
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to prepare for a possible war
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o strengthen local governments
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Detailed explanation-1: -The government’s “easy money” policies caused an artificial economic boom and a subsequent crash. President Herbert Hoover’s interventionist policies after the crash suppressed the self-adjusting aspect of the market, thus preventing recovery and prolonging the recession.
Detailed explanation-2: -Since the late 1930s, conventional wisdom has held that President Franklin D. Roosevelt’s “New Deal” helped bring about the end of the Great Depression. The series of social and government spending programs did get millions of Americans back to work on hundreds of public projects across the country.
Detailed explanation-3: -Government Intervention The federal government uses regulation to correct for market failures. It can intervene to create public goods by forcing people to pay taxes. It can lower barriers to entry by providing economic incentives or grants to entrepreneurs.
Detailed explanation-4: -There was a significant drop in consumer spending and investments that caused a major decline in industrial output and laid off employees from companies. By 1933, the unemployment rate had risen to 25%, and the GDP of the USA contracted to half of its value due to deflation.