Question

How did the Great Depression affect economists’ beliefs about the macroeconomy?

Answer 1

The Great Depression affected economists' beliefs about the macroeconomy because it made them realize that the U.S. economy actually depends on the economies of countries around the world. Prior to this, the thought was that our economy was solely dependent on actions within the U.S.

Answer 2

Instead of assuming that the macroeconomy would automatically recover from a recession, economists began to consider the possibility that modern market economies could fall into prolonged contractions and that government assistance would be necessary to pull them out. (grad point)