Watch the MRU video: Understanding the Great Depression and answer the following questions.
1.According to the video, what was the most important cause of the Great Depression? (1/2 point)

  1. What adverse demand shocks are mentioned? For each shock, indicate which component of aggregate demand, C, I, G or NX, was affected. (3 points; 1/2 point each)
  2. What adverse supply shocks (“real shocks”, in the video) contributed to the severity of the Depression, and/or hindered the recovery? (1 point; 1/2 point each)
  3. The video argues that some “policy decisions” made the Great Depression worse. Name one of the two mentioned. (1/2 point)

Sample Solution

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