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Basic Concepts & the Circular Flow · Question 5 of 72

Question 5

MediumOriginal question

During the Great Depression of 1929, the main problem that classical economics could not explain was

Options for question 5

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. Classical economists expected markets to clear, so unemployment should vanish on its own.

  2. Instead, output and employment stayed low for years, which needed a theory of aggregate demand.

Concept
The Depression and macroeconomics
Typical time
70 s
Your time
—
The rule this testsWhat macroeconomics studies
Practise this chapter →

Ten questions from Basic Concepts & the Circular Flow, at your own pace.

Practise this chapter →

Ten questions from Basic Concepts & the Circular Flow, at your own pace.