Question

The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy."

- Milton Friedman
The quote by Milton Friedman supports his belief that the federal government should
A) decrease the role of the private economy.
B) increase their participation in fiscal policy.
C) increase their participation in monetary policy.
D) decrease their participation in monetary policy.

Answer 1

D) decrease their participation in monetary policy.

Step-by-step explanation:

Milton Friedman was known to be a strong supporter of capitalist system, and advocate for less government involvement in the economy.

Take a look at this part of the quote:

. . .produced by government mismanagement rather than by any inherent instability of the private economy . . .

Through that sentence, Friedman infer that the intervention that the government made (such as subsidies or bailouts) toward the private sectors prevent the private sectors from competing on equal ground, which lead to instability in the market.

The companies who do not receive favor/support from the government lost the competition and forced to cut down the employees that they have, which leads to the period of unemployment leading to great depression.

Because of this, he believe that te government should decrease their participation in monetary policy in order to maintain market stability.