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How did the Great Depression influence economic thinking?
- a)Reinforced classical tradition.
- b)Prompted a rethinking of the economy, giving rise to macroeconomics.
- c)Led to the dominance of microeconomics.
- d)Increased focus on individual markets.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
How did the Great Depression influence economic thinking?a)Reinforced ...
The Great Depression prompted a rethinking of the economy, challenging the classical tradition and leading to the emergence of macroeconomics.
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How did the Great Depression influence economic thinking?a)Reinforced ...
Influence of the Great Depression on Economic Thinking
The Great Depression, which began in 1929 and lasted through the 1930s, was a pivotal moment in economic history that significantly influenced economic theories and practices.
Shift from Classical Economics
- The severe economic downturn challenged the classical economic belief that markets are self-regulating.
- Classical economists believed that supply and demand would automatically adjust to restore equilibrium, but the persistent high unemployment and low demand during the Great Depression contradicted this view.
Rise of Macroeconomics
- The crisis prompted economists to rethink traditional economic models, leading to the development of macroeconomics, which studies the economy as a whole rather than individual markets.
- Macroeconomics focuses on aggregate indicators such as GDP, unemployment rates, and inflation, providing a broader understanding of economic dynamics.
Key Theorists and Ideas
- John Maynard Keynes emerged as a central figure during this time, advocating for government intervention to manage economic cycles.
- Keynes argued that during periods of low demand, increased government spending could stimulate economic activity, a concept that formed the foundation of Keynesian economics.
Long-term Implications
- The Great Depression led to the establishment of new economic policies, including fiscal and monetary interventions.
- It also influenced the role of government in the economy, shifting towards a more active approach in managing economic downturns.
In summary, the Great Depression was instrumental in prompting a fundamental rethinking of economic theories, ultimately giving rise to macroeconomics as a distinct field of study.
The Great Depression, which began in 1929 and lasted through the 1930s, was a pivotal moment in economic history that significantly influenced economic theories and practices.
Shift from Classical Economics
- The severe economic downturn challenged the classical economic belief that markets are self-regulating.
- Classical economists believed that supply and demand would automatically adjust to restore equilibrium, but the persistent high unemployment and low demand during the Great Depression contradicted this view.
Rise of Macroeconomics
- The crisis prompted economists to rethink traditional economic models, leading to the development of macroeconomics, which studies the economy as a whole rather than individual markets.
- Macroeconomics focuses on aggregate indicators such as GDP, unemployment rates, and inflation, providing a broader understanding of economic dynamics.
Key Theorists and Ideas
- John Maynard Keynes emerged as a central figure during this time, advocating for government intervention to manage economic cycles.
- Keynes argued that during periods of low demand, increased government spending could stimulate economic activity, a concept that formed the foundation of Keynesian economics.
Long-term Implications
- The Great Depression led to the establishment of new economic policies, including fiscal and monetary interventions.
- It also influenced the role of government in the economy, shifting towards a more active approach in managing economic downturns.
In summary, the Great Depression was instrumental in prompting a fundamental rethinking of economic theories, ultimately giving rise to macroeconomics as a distinct field of study.
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How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer?
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How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer?.
How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How did the Great Depression influence economic thinking?a)Reinforced classical tradition.b)Prompted a rethinking of the economy, giving rise to macroeconomics.c)Led to the dominance of microeconomics.d)Increased focus on individual markets.Correct answer is option 'B'. Can you explain this answer?.
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