Question

Please label the statements as true or false regarding economic booms and busts. With enough careful planning, fiscal and monetary policy can prevent recessions. Had the U.S. government used fiscal and monetary policy more effectively, many economists believe that the Great Depression would not have been as severe. At the time of the Great Depression, fiscal and monetary policy were not well understood. Booms and busts are natural responses to ever‐changing economic conditions.

Answer 1

With careful planning, fiscal and monetary policy can prevent recessions, and effective use of fiscal and monetary policies could have reduced the severity of the Great Depression. However, at the time of the Great Depression, fiscal and monetary policy were not well understood. Booms and busts are natural responses to changing economic conditions.

Step-by-step explanation:

The statements can be labeled as follows:

1. True - With careful planning, fiscal (government spending and taxation) and monetary policy (the Federal Reserve's control over interest rates and money supply) can help prevent recessions by stabilizing the economy.
2. True - Many economists believe that if the U.S. government had used fiscal and monetary policies more effectively during the Great Depression, the severity of the depression could have been reduced.
3. False - At the time of the Great Depression, fiscal and monetary policy were not well understood, and the government did not have the tools and knowledge to effectively mitigate the effects of the Depression.
4. True - Booms and busts are natural responses to ever-changing economic conditions as the economy goes through periods of expansion and contraction due to various factors like consumer behavior, business cycles, and global events.

Answer 2

With enough careful planning, fiscal and monetary policy can prevent recessions. = False

There is a normal economic cycle, which includes recession and boom accordingly, therefore, no policy can prevent such phase of an economic cycle, as the cycle is bound to happen and all the changes are inevitable.

Had the U.S. government used fiscal and monetary policy more effectively, many economists believe that the Great Depression would not have been as severe. = True

Although, there is standard economic cycle which includes recession, but with the correct formation and implementation of policies the tendency of such phases can be controlled up-to an extent, thereby, the policies if applied more effectively then, the economy had not face such huge depression.

At the time of the Great Depression, fiscal and monetary policy were not well understood. = True

As said in above point the policy if was properly implemented the tendency of depression would have been low, and accordingly it concludes that the policy was not properly understood, and thus, not implemented properly at the time of great depression.

Booms and busts are natural responses to ever‐changing economic conditions. = True

There is a standard economic cycle, which includes all the phases, including boom and recession, as normal results of economic change.