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Answer During the inter-war period, economists and politicians learned two crucial lessons:
The Importance of Macroeconomic Stability: The experience of the Great Depression highlighted the devastating consequences of macroeconomic instability, including massive unemployment, deflation, and economic collapse. Policymakers recognized the need for proactive fiscal and monetary policies to stabilize economies, prevent severe downturns, and promote sustainable growth.
The Dangers of Protectionism and Economic Nationalism: The rise of protectionist policies and economic nationalism during the inter-war years exacerbated global economic tensions and contributed to the onset of World War II. Policymakers learned the importance of promoting international cooperation, free trade, and open markets to foster global economic prosperity and prevent conflicts driven by economic grievances.
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