Question

17)Which of the following is TRUE?

Select one:

a. The idea that policy makers should fight a recession with expansionary monetary policy is supported by Classical economics

b. The Smoot Hawley Tariff Act caused the AD to shift to the right during the Great Depression

c. During the Great Depression economic policy was guided by the teachings of Classical economics

d. Adam Smith wrote The General Theory of Employment, Interest, and Income.

Answer 1

Answer: TRUE statement is option (c ) because during depression classical economics guided . like keynes , he focus on aactive government involvement , active fiscal and monetary policy .

however smooth hawley tariff act increases the tariff on import , which reduces the amount of imported commodity and hence reduce demand . so it is false .

option (a ) is not true because classical economics agree the involvement of fiscal policy directly but the involvement of monetary policy was not direct one . so it is false .

option (d) is also wrong because The General Theory of Employment, Interest, and Income. john maynard keynes was written by john maynard keynes not adam smith .