How did the United States and many European countries initially respond to the decrease in tax revenue caused by the Great Depre
ssion? A. Reducing taxes on goods imported from other countries
B. Investing more government funds into stock markets
C. Cutting government spending to avoid going into debt
D. Creating public works programs to reduce unemployment
The correct answer is C) Cutting government spending to avoid going into debt.
The United States and many European countries initially respond to the decrease in tax revenue caused by the Great Depression in "cutting government spending to avoid going into debt."
As the Great Depression hit hard on most people, they could not pay taxes because they were left with no jobs. So in order to not generate more debt, the US and other European governments reduce their spending. Let's remember that the Great Depression started on October 29, 1929, after the US stock market crashed, leaving millions of people without a job, many bankruptcies, and hundreds of companies had to close.
