Which of the following statements is consistent with what happened during the Gr

Question

Which of the following statements is consistent with what happened during the Great Depression? The Great Depression had an unemployment rate greater than the Great Recession that was largely due to a decrease in aggregate supply. The unemployment rate was over 25% at the height of the Great Depression. This spike in unemployment was caused by the large decrease in aggregate demand. It took four years for potential GDP to return to its pre-Depression level after the Great Depression. Faulty macroeconomic policies were not a part of the cause of the Great Depression. 0

Explanation / Answer

The unemployment rate in Great Depression reached a peak of 25% as compared to 22% of Great Recession. Hence the unemployment rate was greater in Great Depression which leads to first option being correct.

Unemployment rate did not cross 25% mark in Great Depression. Hence second option is false.

Many economies struggled till World War 2 to get back to its GDP. Hence third option is wrong.

Many macro economic policies fuelled this process and the claim is thus incorrect. Hence forth option is misleading.  

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