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In tracing the origins of the Great Depression, Berkeley economist Christina Romer argues that the U.S. suered a large fall in aggregate demand following the

In tracing the origins of the Great Depression, Berkeley economist Christina Romer argues that the U.S. suered a large fall in aggregate demand following the 1929 stock market crash. For starters, explain how the crash could have induced such an effect. Knowing that the U.S. was on the gold standard at the time, explain in the AA-DD model how the Federal Reserve would be expected to respond to this shock? What is the effect of this policy on output?

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