Which economic practice started with Hoover during the Great Depression?

Which economic practice started with Hoover during the Great Depression?

• A. Market stabilization
• B. Deficit spending
• C. Bailout funding
• D. Tax reduction

Answer: (B)

The correct choice is deficit spending. During Herbert Hoover's presidency, as the Great Depression began to unfold, he initiated measures aimed at stimulating the economy, even though he was initially reluctant to use government intervention. Deficit spending involves the government spending more money than it receives in revenue, with the intent of boosting economic activity through government programs and infrastructure projects. Although some of Hoover's efforts remained within a framework of cautious intervention, it was marked by an increase in government spending to address the worsening economic conditions. This approach laid the groundwork for future administrations to adopt more aggressive spending strategies during economic downturns, notably Franklin D. Roosevelt’s New Deal. Understanding this context clarifies how deficit spending became associated with Hoover's approach during the Great Depression, distinguishing it from other economic strategies that may not align with his policies at that time.

The correct choice is deficit spending. During Herbert Hoover's presidency, as the Great Depression began to unfold, he initiated measures aimed at stimulating the economy, even though he was initially reluctant to use government intervention. Deficit spending involves the government spending more money than it receives in revenue, with the intent of boosting economic activity through government programs and infrastructure projects.

Although some of Hoover's efforts remained within a framework of cautious intervention, it was marked by an increase in government spending to address the worsening economic conditions. This approach laid the groundwork for future administrations to adopt more aggressive spending strategies during economic downturns, notably Franklin D. Roosevelt’s New Deal.

Understanding this context clarifies how deficit spending became associated with Hoover's approach during the Great Depression, distinguishing it from other economic strategies that may not align with his policies at that time.