Practice question · Sort into groups
Sort each factor: did it deepen the Depression or help recovery?
Groups: Deepened the Depression · Helped recovery
- Leaving the gold standard
- The Fed tightened money during the contraction
- Governments cutting spending to balance budgets
- Fiscal expansion and the New Deal
- Smoot-Hawley tariff and retaliation
Hints
- Ask whether the policy tightened or loosened.
- Defending the currency and raising tariffs both pulled the wrong way.
Show the answer
Deepened the Depression: The Fed tightened money during the contraction, Smoot-Hawley tariff and retaliation, Governments cutting spending to balance budgets
Helped recovery: Leaving the gold standard, Fiscal expansion and the New Deal
Why
Monetary tightening, tariffs, and austerity deepened the crisis. Leaving gold and fiscal expansion enabled recovery. The Depression was a policy failure as much as a market failure.
Practise The Great Depression
The app has 5 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on The Great Depression
- Order the Depression cascade.
- The Smoot-Hawley tariff helped the US economy by protecting domestic producers.
- If US unemployment reached 25% in 1933 and the labour force was 52 million, how many were unemployed (in…
- Friedman and Keynes both explain the Depression, but their accounts imply different remedies. What explains…
- Match each Depression lesson to its institutional outcome.
- Between 1929 and 1933 the US money supply fell by about a third while the Federal Reserve did little.…
- Keynes argued a government should spend MORE during a demand collapse, when a household in trouble would cut…
- Which are lessons modern central banks absorbed from the Depression?