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The Great Depression challenged the classicaleconomic belief that the macroeconomy quicklyreturns to long-run equilibrium following a demandshock, since it wasn’t until seven yearsafter the Depression began that real GDP returned to pre-Depression levels.p. 428-429 The graph below plots the unemployment rate over time from the start of the Great Recession. Click on the unemployment rate range that
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contains the maximum unemployment rate reached during the Great Depression of the 1930s.answer : 25%p. 433 Fill in the following passage concerning the Great Depression.The Great Depression is generally regarded as beginning with the stock marketcrash of October 29, 1929. Including that day, stock prices fell by almost 90%over the next few years. The Great Depression ended in 1938.p. 428 Which of the following statements regarding the Great Recession are correct?Correct Answer(s)After output began to decline, it took four years for U.S. GDP to return to pre-recession levels.Incorrect Answer(s)The recession was four years long.The peak unemployment rate in the United States during this period was 7%.The peak unemployment rate in the United States during this period was 25%.p. 437 Which of the following are true according to the Keynesian economic view?Correct Answer(s)Nominal prices matter to the long-run economy.Incorrect Answer(s)A decrease in the government-spending component of aggregate demand will not a±ect real GDP for very long.
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Even a severe decrease in citizens’ expectations of future income will not aFect long-run economic output.