Question 1

Which of the following is FALSE?

Accepted Answer

A) in 1929, the U.S. unemployment rate averaged 3.2 percent 
B) in 1933, the U.S. unemployment rate hit an all-time high of 20.1 percent 
C) from 1930 to 1939 the U.S. experienced unemployment rates in the double digits, despite massive government intervention 
D) both the Keynesian and the monetarists explanations of the Great Depression fit the facts 
E) macroeconomics developed as a distinct discipline as a result of what happened during the Great Depression 
A) in 1929, the U.S. unemployment rate averaged 3.2 percent 
B) in 1933, the U.S. unemployment rate hit an all-time high of 20.1 percent 
C) from 1930 to 1939 the U.S. experienced unemployment rates in the double digits, despite massive government intervention 
D) both the Keynesian and the monetarists explanations of the Great Depression fit the facts 
E) macroeconomics developed as a distinct discipline as a result of what happened during the Great Depression B

Question 2

Which of the following occurred in the U.S.during the period of "the Great Moderation?"

Accepted Answer

A) inflation was brought under control 
B) economic fluctuations were much less pronounced than in previous decades 
C) the economy experienced a few negative quarterly GDP growth rates 
D) all of the above 
E) none of the above 
A) inflation was brought under control 
B) economic fluctuations were much less pronounced than in previous decades 
C) the economy experienced a few negative quarterly GDP growth rates 
D) all of the above 
E) none of the above D

Question 3

If we compare the Great Depression with the Great Recession, we see that

Accepted Answer

A) the Great Recession was more severe but of much shorter duration than the Great Depression 
B) unemployment reached 24% in the Great Depression but only 12% in the Great Recession 
C) both economic downturns were the result of a major stock market crash 
D) the policy responses to the Great Recession were much more immediate and massive than the responses to the Great Depression 
E) all of the above 
A) the Great Recession was more severe but of much shorter duration than the Great Depression 
B) unemployment reached 24% in the Great Depression but only 12% in the Great Recession 
C) both economic downturns were the result of a major stock market crash 
D) the policy responses to the Great Recession were much more immediate and massive than the responses to the Great Depression 
E) all of the above D

Question 4

One of the assertions that Keynesians make when explaining the severity of the Great Depression in the U.S.is that

Accepted Answer

A) the economic collapse originated from the negative effect that the stock market crash had on individuals' wealth 
B) investment spending responded negatively to huge increases in the real interest rate 
C) vigorous use of expansionary fiscal policy early on could have reduced the severity of the economic downturn 
D) in response to the stock market crash, the U.S. Fed imposed credit controls that were much too restrictive 
E) none of the above 
A) the economic collapse originated from the negative effect that the stock market crash had on individuals' wealth 
B) investment spending responded negatively to huge increases in the real interest rate 
C) vigorous use of expansionary fiscal policy early on could have reduced the severity of the economic downturn 
D) in response to the stock market crash, the U.S. Fed imposed credit controls that were much too restrictive 
E) none of the above

Question 5

In the early 1930s interest rates were very low and money supply declined sharply.This was mostly the result of

Accepted Answer

A) restrictive monetary policies 
B) the Fed conducting open market sales on a large scale 
C) restrictive monetary policy combined with restrictive fiscal policy 
D) restrictive monetary policy combined with expansionary fiscal policy 
E) a large number of bank failures and low credit demand 
A) restrictive monetary policies 
B) the Fed conducting open market sales on a large scale 
C) restrictive monetary policy combined with restrictive fiscal policy 
D) restrictive monetary policy combined with expansionary fiscal policy 
E) a large number of bank failures and low credit demand

Question 6

According to the Keynesians, the Great Depression was primarily caused by

Accepted Answer

A) the stock market crash of 1929, in which many people lost their life savings 
B) an inactive Fed that did not respond adequately to the financial crisis that followed the stock market crash of 1929 
C) a sharp reduction in consumption and investment spending accompanied by restrictive fiscal policies 
D) large budget deficits that crowded out private spending as the government implemented a fiscal stimulus package 
E) a collapse of the housing market followed by a financial crisis that made it difficult for businesses to get loans 
A) the stock market crash of 1929, in which many people lost their life savings 
B) an inactive Fed that did not respond adequately to the financial crisis that followed the stock market crash of 1929 
C) a sharp reduction in consumption and investment spending accompanied by restrictive fiscal policies 
D) large budget deficits that crowded out private spending as the government implemented a fiscal stimulus package 
E) a collapse of the housing market followed by a financial crisis that made it difficult for businesses to get loans

Question 7

The Great Recession officially lasted from

Accepted Answer

A) 1929-45 
B) 1930-35 
C) 1981-82 
D) 2007-09 
E) 2008-11 
A) 1929-45 
B) 1930-35 
C) 1981-82 
D) 2007-09 
E) 2008-11

Question 8

Inflation-adjusted home prices in the U.S.

Accepted Answer

A) experienced huge spikes in the 1960s 
B) increased sharply in the early 1990s and then leveled off until about 2006 
C) were at their highest shortly after World War II when there was a severe shortage of housing 
D) all of the above 
E) none of the above 
A) experienced huge spikes in the 1960s 
B) increased sharply in the early 1990s and then leveled off until about 2006 
C) were at their highest shortly after World War II when there was a severe shortage of housing 
D) all of the above 
E) none of the above

Question 9

The initial response of the Federal Reserve to the economic collapse at the beginning of the Great Depression was to

Accepted Answer

A) observe from the sidelines 
B) lend vigorously to banks facing liquidity problems 
C) guarantee customer deposits in failed banks 
D) abolish previously imposed credit controls 
E) conduct huge open market sales in an effort to change interest rates 
A) observe from the sidelines 
B) lend vigorously to banks facing liquidity problems 
C) guarantee customer deposits in failed banks 
D) abolish previously imposed credit controls 
E) conduct huge open market sales in an effort to change interest rates

Question 10

What does U6, a broad measure of unemployment, stand for?

Accepted Answer

A) total unemployed, including workers who are underemployed 
B) total unemployed minus all marginally attached workers 
C) total unemployed plus all marginally attached workers and total employed part time for economic reasons 
D) total unemployed, including all marginally attached workers but excluding workers who are underemployed 
E) total unemployed, excluding those out of work for more than six months 
A) total unemployed, including workers who are underemployed 
B) total unemployed minus all marginally attached workers 
C) total unemployed plus all marginally attached workers and total employed part time for economic reasons 
D) total unemployed, including all marginally attached workers but excluding workers who are underemployed 
E) total unemployed, excluding those out of work for more than six months

Question 11

Which of the following did NOT happen in the period from 2008 to 2012?

Accepted Answer

A) Canada experienced a worse recession than the U.S. 
B) Ireland and Iceland suffered greatly from the financial crisis that originated in the U.S. 
C) long-term unemployment in the U.S. reached unprecedented levels 
D) nearly one out of six workers in the U.S. was either unemployed or underemployed 
E) the average duration of unemployment went from about 15 weeks to about 40 weeks 
A) Canada experienced a worse recession than the U.S. 
B) Ireland and Iceland suffered greatly from the financial crisis that originated in the U.S. 
C) long-term unemployment in the U.S. reached unprecedented levels 
D) nearly one out of six workers in the U.S. was either unemployed or underemployed 
E) the average duration of unemployment went from about 15 weeks to about 40 weeks

Question 12

Which of the following occurred in the U.S.during the period from 1929 to 1933?

Accepted Answer

A) the CPI increased nearly 35% 
B) the stock market fell nearly 50% 
C) the unemployment rate rose from 3% to 12% 
D) output fell nearly 30% 
E) all of the above 
A) the CPI increased nearly 35% 
B) the stock market fell nearly 50% 
C) the unemployment rate rose from 3% to 12% 
D) output fell nearly 30% 
E) all of the above

Question 13

Which of the following did NOT happen during the Great Depression?

Accepted Answer

A) U)S. unemployment reached 24 percent 
B) many countries imposed high tariffs causing a decline in world trade 
C) almost every country in the world suffered from a deep recession 
D) U)S. unemployment did not fall below 5 percent until the U.S. entered World War II 
E) the U.S. government quickly cut taxes causing federal budget deficits to increase sharply 
A) U)S. unemployment reached 24 percent 
B) many countries imposed high tariffs causing a decline in world trade 
C) almost every country in the world suffered from a deep recession 
D) U)S. unemployment did not fall below 5 percent until the U.S. entered World War II 
E) the U.S. government quickly cut taxes causing federal budget deficits to increase sharply

Question 14

During the period from 1950 to 2010,

Accepted Answer

A) economic fluctuations were greater from 1950-1980 than from 1980-2000 
B) fluctuations in the inflation rate were greater before 1985 than after 
C) since the mid-1980s, the inflation rate has never exceeded 5 percent 
D) all of the above 
E) only 
B) and 
C)  
A) economic fluctuations were greater from 1950-1980 than from 1980-2000 
B) fluctuations in the inflation rate were greater before 1985 than after 
C) since the mid-1980s, the inflation rate has never exceeded 5 percent 
D) all of the above 
E) only 
B) and 
C)

Question 15

Between 2008 and 2011, the average duration of unemployment in the U.S.increased from

Accepted Answer

A) about 10 to about 24 weeks 
B) about 15 to about 30 weeks 
C) about 15 to about 40 weeks 
D) about 20 to about 28 weeks 
E) about 20 to about 32 weeks 
A) about 10 to about 24 weeks 
B) about 15 to about 30 weeks 
C) about 15 to about 40 weeks 
D) about 20 to about 28 weeks 
E) about 20 to about 32 weeks

Question 16

Which of the following did NOT happen in the U.S.as a result of the Great Depression?

Accepted Answer

A) the Fed was reorganized 
B) the Federal Deposit Insurance Corporation (FDI
C)  was established 
C) the Securities and Exchange Commission (SE
C)  was created 
D) the Social Security Administration was established 
E) unionization was discouraged to keep wages and prices low 
A) the Fed was reorganized 
B) the Federal Deposit Insurance Corporation (FDI
C)  was established 
C) the Securities and Exchange Commission (SE
C)  was created 
D) the Social Security Administration was established 
E) unionization was discouraged to keep wages and prices low

Question 17

During which year of the Great Depression did the U.S.experience the highest rate of unemployment?

Accepted Answer

A) 1929 
B) 1931 
C) 1933 
D) 1936 
E) 1938 
A) 1929 
B) 1931 
C) 1933 
D) 1936 
E) 1938

Question 18

While the U.S.was in the Great Depression

Accepted Answer

A) many European countries were enjoying modest to substantial growth 
B) many countries were erecting trade barriers through tariffs 
C) many U.S. businesses took advantage of low interest rates and increased investment spending 
D) most of the (then)48 states cut taxes and increased deficit spending as a way to stimulate their economies 
E) all of the above 
A) many European countries were enjoying modest to substantial growth 
B) many countries were erecting trade barriers through tariffs 
C) many U.S. businesses took advantage of low interest rates and increased investment spending 
D) most of the (then)48 states cut taxes and increased deficit spending as a way to stimulate their economies 
E) all of the above

Question 19

Assume 160 million people are in the work force but 10% of them are unemployed.If the average duration of unemployment is eight months and the average monthly paycheck is $3,000, what is the approximate cost of the unemployment in terms of lost wages?

Accepted Answer

A) $3.2 trillion 
B) $384 billion 
C) $224 billion 
D) $32 billion 
E) $24 billion 
A) $3.2 trillion 
B) $384 billion 
C) $224 billion 
D) $32 billion 
E) $24 billion

Question 20

The term "the Great Moderation" refers to

Accepted Answer

A) the fact that members of Congress collaborated much better in the 1980s or 1990s than in recent years 
B) the fact that inflation-adjusted housing prices stayed fairly constant from 1950 to 1975 
C) the period in the 1930s after the New Deal was implemented 
D) the period after the Great Recession when the economy started to grow only slowly 
E) the period from 1980 to 2007 when economic cycles were kept at a minimum 
A) the fact that members of Congress collaborated much better in the 1980s or 1990s than in recent years 
B) the fact that inflation-adjusted housing prices stayed fairly constant from 1950 to 1975 
C) the period in the 1930s after the New Deal was implemented 
D) the period after the Great Recession when the economy started to grow only slowly 
E) the period from 1980 to 2007 when economic cycles were kept at a minimum

Exam 21: Recession and depression

Which of the following is FALSE?

Which of the following occurred in the U.S.during the period of "the Great Moderation?"

If we compare the Great Depression with the Great Recession, we see that

One of the assertions that Keynesians make when explaining the severity of the Great Depression in the U.S.is that

In the early 1930s interest rates were very low and money supply declined sharply.This was mostly the result of

According to the Keynesians, the Great Depression was primarily caused by

The Great Recession officially lasted from

Inflation-adjusted home prices in the U.S.

The initial response of the Federal Reserve to the economic collapse at the beginning of the Great Depression was to

What does U6, a broad measure of unemployment, stand for?

Which of the following did NOT happen in the period from 2008 to 2012?

Which of the following occurred in the U.S.during the period from 1929 to 1933?

Which of the following did NOT happen during the Great Depression?

During the period from 1950 to 2010,

Between 2008 and 2011, the average duration of unemployment in the U.S.increased from

Which of the following did NOT happen in the U.S.as a result of the Great Depression?

During which year of the Great Depression did the U.S.experience the highest rate of unemployment?

While the U.S.was in the Great Depression

Assume 160 million people are in the work force but 10% of them are unemployed.If the average duration of unemployment is eight months and the average monthly paycheck is $3,000, what is the approximate cost of the unemployment in terms of lost wages?

The term "the Great Moderation" refers to

Introduction

National income accounting

Growth and accumulation

Growth and policy

Aggregate supply and demand

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Money, interest, and income

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Inflation and hyperinflation

International adjustment and interdependence

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