Question

Early economists believed that the U.S. economy would regulate itself. Which historical event radically changed their thinking and convinced most economists of the importance of measuring macroeconomic performance? a the Panic of 1873 b the Great Depression c the Second World War d the energy crisis of 1979

Answer 1

The best answer is b) The Great Depression.
Although the Progressive Movement had taken some steps toward greater government regulation, prior to the epic stock market crash of 1929, the general belief was that little to nothing can be done by the government to positively regulate the economy, and that it was best to let the free market play the greatest role in managing US economy. The Panic of 1929 and the Depression that followed was a blow to people's confidence in unfettered capitalism, and ushered in Keynesian and Neokeynesian ideas, which essentially advocate for a greater role of government in the economy.