Question: Before the Great Depression, the conventional wisdom among economists and policy makers was that the economy is largely self-regulating.

a. Is this view consistent or inconsistent with Keynesian economics? Explain.

b. What effect did the Great Depression have on conventional wisdom?

c. Contrast the response of policy makers during the 2007-2009 recession to the actions of policy makers during the Great Depression. What would have been the likely outcome of the 2007-2009 recession if policy makers had responded in the same fashion as policy makers during the Great Depression?