Question 1

If we look at the average duration of unemployment from 1950 to 2013, we see that

Accepted Answer

A) it was generally higher shortly after recessions than during the recessions 
B) it reached an all-time high in 2011 
C) in 2011 it was more than twice as high as at any previous time 
D) all of the above 
E) none of the above 
A) it was generally higher shortly after recessions than during the recessions 
B) it reached an all-time high in 2011 
C) in 2011 it was more than twice as high as at any previous time 
D) all of the above 
E) none of the above

Question 2

If you had $1,000 invested in the stock market at its peak in 1929, approximately how much would it have been worth at the lowest level in 1932?

Accepted Answer

A) $50 
B) $150 
C) $350 
D) $450 
E) $750 
A) $50 
B) $150 
C) $350 
D) $450 
E) $750

Question 3

Mortgage-backed securities

Accepted Answer

A) are low risk financial instruments, as their market value is based on long-term mortgages 
B) were only marketed in the U.S. and could not be sold to financial institutions abroad 
C) are fairly risk-free as the financial institutions that buy and sell them understand how to spread the risk that is involved 
D) are a form of derivatives, that is, securities whose value is based on the value of other financial instruments 
E) none of the above 
A) are low risk financial instruments, as their market value is based on long-term mortgages 
B) were only marketed in the U.S. and could not be sold to financial institutions abroad 
C) are fairly risk-free as the financial institutions that buy and sell them understand how to spread the risk that is involved 
D) are a form of derivatives, that is, securities whose value is based on the value of other financial instruments 
E) none of the above

Question 4

Which of the following was TRUE about the financial crisis of 2008?

Accepted Answer

A) it started in the U.S., but quickly spread to global financial markets 
B) as credit markets froze, U.S. businesses had trouble financing their inventories 
C) the recession that followed in the U.S. might have been a lot worse if the government hadn't undertaken decisive monetary and fiscal policy measures 
D) all of the above 
E) only 
A) and 
C)  
A) it started in the U.S., but quickly spread to global financial markets 
B) as credit markets froze, U.S. businesses had trouble financing their inventories 
C) the recession that followed in the U.S. might have been a lot worse if the government hadn't undertaken decisive monetary and fiscal policy measures 
D) all of the above 
E) only 
A) and 
C)

Question 5

About how much of its value did the U.S.stock market lose between September 1929 and June 1932?

Accepted Answer

A) 24% 
B) 35% 
C) 64% 
D) 85% 
E) 92% 
A) 24% 
B) 35% 
C) 64% 
D) 85% 
E) 92%

Question 6

Which of the following is FALSE about the mortgage-backed securities?

Accepted Answer

A) many of them were purchased by financial investors who had no idea how risky they were 
B) they were marketed as virtually risk-free even though they were actually very risky 
C) in principle they spread risk more widely and allow banks to make more loans 
D) all of the above 
E) none of the above 
A) many of them were purchased by financial investors who had no idea how risky they were 
B) they were marketed as virtually risk-free even though they were actually very risky 
C) in principle they spread risk more widely and allow banks to make more loans 
D) all of the above 
E) none of the above

Question 7

Which of the following is FALSE about the financial crisis of 2008?

Accepted Answer

A) the crisis started in the in the U.S. but had a particularly devastating effect on the economies of Mexico and Canada 
B) as it became increasingly difficult to get loans, the financial crisis quickly spread to the goods and labor markets causing economic activity to decline 
C) in the recession that followed, the unemployment level in the U.S. hit highs not seen since 1983 and reached its peak only after the recession was officially declared over 
D) as financial institutions curtailed their lending activity, even solvent firms experienced severe liquidity problems 
E) none of the above 
A) the crisis started in the in the U.S. but had a particularly devastating effect on the economies of Mexico and Canada 
B) as it became increasingly difficult to get loans, the financial crisis quickly spread to the goods and labor markets causing economic activity to decline 
C) in the recession that followed, the unemployment level in the U.S. hit highs not seen since 1983 and reached its peak only after the recession was officially declared over 
D) as financial institutions curtailed their lending activity, even solvent firms experienced severe liquidity problems 
E) none of the above

Question 8

Assume 140 million people are in the work force but 12% of them are unemployed.If the average duration of unemployment is ten months and the average monthly paycheck is $3,200, what is the approximate cost of the unemployment in terms of lost wages?

Accepted Answer

A) $64 trillion 
B) $8.4 trillion 
C) $684 billion 
D) $540 billion 
E) $38 billion 
A) $64 trillion 
B) $8.4 trillion 
C) $684 billion 
D) $540 billion 
E) $38 billion

Question 9

The monetarist explanation of the Great Depression emphasizes the fact that

Accepted Answer

A) investment and consumption spending collapsed because of negative expectations 
B) the economy was basically unstable and could not recover because the government didn't increase spending drastically 
C) the Fed pushed interest rates to extremely low levels, which forced the economy into the liquidity trap 
D) the Fed didn't do enough to prevent the large number bank failures, which resulted in a huge decline in money supply 
E) the Fed failed to establish a strict monetary growth rule early on 
A) investment and consumption spending collapsed because of negative expectations 
B) the economy was basically unstable and could not recover because the government didn't increase spending drastically 
C) the Fed pushed interest rates to extremely low levels, which forced the economy into the liquidity trap 
D) the Fed didn't do enough to prevent the large number bank failures, which resulted in a huge decline in money supply 
E) the Fed failed to establish a strict monetary growth rule early on

Question 10

During the Great Recession of 2007-09

Accepted Answer

A) long-term unemployment rose to unprecedented levels 
B) the official unemployment rate reached almost 14 percent 
C) the unemployment rate reached levels not seen since the Great Depression 
D) the duration of unemployment rose sharply but not to the level it reached shortly after the recession of 1981/82 
E) all of the above 
A) long-term unemployment rose to unprecedented levels 
B) the official unemployment rate reached almost 14 percent 
C) the unemployment rate reached levels not seen since the Great Depression 
D) the duration of unemployment rose sharply but not to the level it reached shortly after the recession of 1981/82 
E) all of the above

Question 11

After the Great Recession was officially over, the average duration of unemployment in the U.S.peaked at about

Accepted Answer

A) 18 weeks 
B) 24 weeks 
C) 32 weeks 
D) 36 weeks 
E) 40 weeks 
A) 18 weeks 
B) 24 weeks 
C) 32 weeks 
D) 36 weeks 
E) 40 weeks

Question 12

Which of the following is TRUE?

Accepted Answer

A) during the 1930s the U.S. federal government never ran a budget surplus 
B) during the 1930s the U.S. never ran a total government full-employment budget surplus 
C) money supply declined drastically from 1929 to 1932 but there was only a minimal response from the U.S. Fed 
D) thanks to massive government intervention early in the 1930s, the U.S. economy had recovered from the economic downturn by 1938 
E) all of the above 
A) during the 1930s the U.S. federal government never ran a budget surplus 
B) during the 1930s the U.S. never ran a total government full-employment budget surplus 
C) money supply declined drastically from 1929 to 1932 but there was only a minimal response from the U.S. Fed 
D) thanks to massive government intervention early in the 1930s, the U.S. economy had recovered from the economic downturn by 1938 
E) all of the above

Question 13

Assume 120 million people are in the work force but 8% of them are unemployed.If the average duration of unemployment is eight months and the average monthly paycheck is $3,400 what is the approximate cost of that unemployment in terms of lost wages?

Accepted Answer

A) $26 trillion 
B) $2.6 trillion 
C) $260 billion 
D) $26 billion 
E) $2.6 billion 
A) $26 trillion 
B) $2.6 trillion 
C) $260 billion 
D) $26 billion 
E) $2.6 billion

Question 14

Between 1996 and 2012, the civilian unemployment rate in the U.S.

Accepted Answer

A) was about 5% for most of the period until the Great Recession, when it climbed to more than 10% 
B) increased steadily and consistently from 2000 to 2008 
C) increased slightly but steadily in the 1990s, then started to decrease until it increased sharply again during the Great Recession 
D) all of the above 
E) none of the above 
A) was about 5% for most of the period until the Great Recession, when it climbed to more than 10% 
B) increased steadily and consistently from 2000 to 2008 
C) increased slightly but steadily in the 1990s, then started to decrease until it increased sharply again during the Great Recession 
D) all of the above 
E) none of the above

Question 15

In 2010, the U.S.unemployment rate reached almost 10 percent, but this official unemployment figure does not tell the whole story since

Accepted Answer

A) many workers became discouraged and left the workforce 
B) the number of marginally attached workers increased 
C) many U.S. workers were underemployed. 
D) long-term unemployment increased drastically 
E) all of the above 
A) many workers became discouraged and left the workforce 
B) the number of marginally attached workers increased 
C) many U.S. workers were underemployed. 
D) long-term unemployment increased drastically 
E) all of the above

Question 16

Between 1950 and 2012, the average duration of unemployment in the U.S.

Accepted Answer

A) increased to about 24 weeks after each recession 
B) decreased to about 15 weeks after each recession 
C) increased before and during each recession but declined sharply after the recession was officially over 
D) all of the above 
E) none of the above 
A) increased to about 24 weeks after each recession 
B) decreased to about 15 weeks after each recession 
C) increased before and during each recession but declined sharply after the recession was officially over 
D) all of the above 
E) none of the above

Question 17

During the period known as "the Great Moderation," the U.S.inflation rate never exceeded

Accepted Answer

A) 2)2% 
B) 2)5% 
C) 3)0% 
D) 3)2% 
E) 5)0% 
A) 2)2% 
B) 2)5% 
C) 3)0% 
D) 3)2% 
E) 5)0%

Question 18

Which of the following is FALSE about unemployment in the U.S.?

Accepted Answer

A) the unemployment rate in 2010 was higher than the unemployment rate in 1983 
B) with a few exceptions, the peak in the average length unemployment following a recession has risen steadily since the 1950s 
C) even four years after the official end of the Great Recession, long-term unemployment remained at levels previously unseen 
D) even during the Great Recession, the unemployment rate did not exceed 10 percent 
E) in 2011, roughly one out of six workers was either unemployed or underemployed. 
A) the unemployment rate in 2010 was higher than the unemployment rate in 1983 
B) with a few exceptions, the peak in the average length unemployment following a recession has risen steadily since the 1950s 
C) even four years after the official end of the Great Recession, long-term unemployment remained at levels previously unseen 
D) even during the Great Recession, the unemployment rate did not exceed 10 percent 
E) in 2011, roughly one out of six workers was either unemployed or underemployed.

Question 19

If you had $5,000 invested in the stock market at its peak in 1929, the beginning of the Great Depression, approximately how much would it have been worth at the lowest level in 1932?

Accepted Answer

A) $2,500 
B) $1,500 
C) $1,000 
D) $750 
E) $500 
A) $2,500 
B) $1,500 
C) $1,000 
D) $750 
E) $500

Question 20

If you had $10,000 invested in the stock market at its peak in September 1929, how much would your portfolio have been worth in June 1932?

Accepted Answer

A) $500 
B) $1,500 
C) $2,500 
D) $3,500 
E) $5,000 
A) $500 
B) $1,500 
C) $2,500 
D) $3,500 
E) $5,000

Exam 21: Recession and depression

If we look at the average duration of unemployment from 1950 to 2013, we see that

If you had $1,000 invested in the stock market at its peak in 1929, approximately how much would it have been worth at the lowest level in 1932?

Mortgage-backed securities

Which of the following was TRUE about the financial crisis of 2008?

About how much of its value did the U.S.stock market lose between September 1929 and June 1932?

Which of the following is FALSE about the mortgage-backed securities?

Which of the following is FALSE about the financial crisis of 2008?

Assume 140 million people are in the work force but 12% of them are unemployed.If the average duration of unemployment is ten months and the average monthly paycheck is $3,200, what is the approximate cost of the unemployment in terms of lost wages?

The monetarist explanation of the Great Depression emphasizes the fact that

During the Great Recession of 2007-09

After the Great Recession was officially over, the average duration of unemployment in the U.S.peaked at about

Which of the following is TRUE?

Assume 120 million people are in the work force but 8% of them are unemployed.If the average duration of unemployment is eight months and the average monthly paycheck is $3,400 what is the approximate cost of that unemployment in terms of lost wages?

Between 1996 and 2012, the civilian unemployment rate in the U.S.

In 2010, the U.S.unemployment rate reached almost 10 percent, but this official unemployment figure does not tell the whole story since

Between 1950 and 2012, the average duration of unemployment in the U.S.

During the period known as "the Great Moderation," the U.S.inflation rate never exceeded

Which of the following is FALSE about unemployment in the U.S.?

If you had $5,000 invested in the stock market at its peak in 1929, the beginning of the Great Depression, approximately how much would it have been worth at the lowest level in 1932?

If you had $10,000 invested in the stock market at its peak in September 1929, how much would your portfolio have been worth in June 1932?

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

Advanced topics

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