How did maintaining the gold standard deepen the severity of the Great Depression?
What will be an ideal response?
A key reason is that to remain on the gold standard, central banks often had to take actions that contracted production and employment rather than expanding it. The Fed attempted to stem the outflows by raising the discount rate because higher interest rates would make financial investments in the United States more attractive to foreign investors. Higher interest rates, though effective in stemming the gold outflow and keeping the United States on the gold standard, were the opposite of the lower interest rates needed to stimulate domestic spending.
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Mutual funds have:
A. increased the risks associated with constructing a portfolio. B. reduced the costs associated with gathering information on stocks and bonds. C. increased the transactions costs associated with participating in financial markets. D. been created for very wealthy individuals with a lot of money to invest.
Markets can be missing:
A. because a market is taxed. B. when the sale of a particular service is banned. C. when miscommunication of information between buyers and sellers leads to the wrong equilibrium price. D. All of these are true.
International trade policies are largely advocated, argued, and lobbied for based more on their distributional effects than on their aggregate or overall effects. What does this imply?
A) Producers will lobby for protectionism even though they may know that their gains from protectionism will be outweighed by the losses to consumers. B) Consumers care more about how policies affect them than how policies affect them and everyone else, too. C) Tariffs are more effective than quotas. D) Consumers' surplus will rise (when it rises) more than producers' surplus will fall (when it falls). E) none of the above
If you were going to expand a facility by adding 10% more seats, and the costs of providing ushers and other personnel to deal with the new seats was exactly the same (on a per seat basis) as the older portion of the facility, the new MC curve would look like the previous one, except that it would
A. just shift to the right. B. just shift up. C. no longer be a backward L but would be upward sloping once the old capacity was reached. D. just shift to the left.