Question 1

During the Great Depression, real GDP decreased by roughly ____ percent and unemployment rose to roughly ____ percent.

Accepted Answer

A)  5; 10 
B)  20; 10 
C)  30;25 
D)  50;25 
A)  5; 10 
B)  20; 10 
C)  30;25 
D)  50;25 C

Question 2

Walton and Rockoff contend that the likelihood of a Great Depression happening again is _______ because (among other reasons) _______.

Accepted Answer

A)  substantial, our continued dependence on a highly volatile stock market. 
B)  substantial, of our reliance on a fractional reserve banking system. 
C)  remote, policymakers are unlikely to repeat the mistakes of the 1930s. 
D)  remote, industry now makes up a much larger share of GNP than it did in the 1930s. 
A)  substantial, our continued dependence on a highly volatile stock market. 
B)  substantial, of our reliance on a fractional reserve banking system. 
C)  remote, policymakers are unlikely to repeat the mistakes of the 1930s. 
D)  remote, industry now makes up a much larger share of GNP than it did in the 1930s. C

Question 3

Between 1929 and 1933, nominal interest rates ___, and real interest rates ___.

Accepted Answer

A)  rose, rose. 
B)  rose, fell. 
C)  fell, rose. 
D)  fell, fell. 
A)  rose, rose. 
B)  rose, fell. 
C)  fell, rose. 
D)  fell, fell. C

Question 4

The first banking crisis of the 1930s was probably caused by

Accepted Answer

A)  low farm prices. 
B)  the stock market crash. 
C)  antagonism between Wall Street banks and Main Street banks. 
D)  Bank of England attempts to preserve the gold standard by raising interest rates. 
A)  low farm prices. 
B)  the stock market crash. 
C)  antagonism between Wall Street banks and Main Street banks. 
D)  Bank of England attempts to preserve the gold standard by raising interest rates.

Question 5

During the Great Depression, one reason the Federal Reserve did not respond forcefully was the "free gold problem," which refers to the idea that ___.

Accepted Answer

A)  gold was fleeing Nazi Germany, thus undermining the Fed's attempt to control the money supply. 
B)  gold was essentially free because people had excess supplies of currency that could be converted into gold. 
C)  the Fed claimed that almost all its gold was tied up by reserve requirements (there was little free so it could not increase the money supply). 
D)  gold was essentially free because silver, which existed in abundance, could be converted into gold at the fixed rate of 16:1. 
A)  gold was fleeing Nazi Germany, thus undermining the Fed's attempt to control the money supply. 
B)  gold was essentially free because people had excess supplies of currency that could be converted into gold. 
C)  the Fed claimed that almost all its gold was tied up by reserve requirements (there was little free so it could not increase the money supply). 
D)  gold was essentially free because silver, which existed in abundance, could be converted into gold at the fixed rate of 16:1.

Question 6

The Stock Market Crash of 1929 probably contributed ____ to the Great Depression because _____.

Accepted Answer

A)  little, it did no more than wipe out the speculative gains made earlier. 
B)  little, the Fed responded by increasing the money supply. 
C)  a good deal, corporations could no longer raise investment funds. 
D)  a good deal, consumer confidence and spending on durables were reduced. 
A)  little, it did no more than wipe out the speculative gains made earlier. 
B)  little, the Fed responded by increasing the money supply. 
C)  a good deal, corporations could no longer raise investment funds. 
D)  a good deal, consumer confidence and spending on durables were reduced.

Question 7

Anna Schwatz and Milton Friedman have argued that the Great Depression was caused by

Accepted Answer

A)  the fall in the stock of money. 
B)  the fall in consumer durable spending. 
C)  the fall in investment spending. 
D)  the increase in nominal wages. 
A)  the fall in the stock of money. 
B)  the fall in consumer durable spending. 
C)  the fall in investment spending. 
D)  the increase in nominal wages.

Question 8

During the Federal Bank Holiday ordered by President Roosevelt and the week that followed it,

Accepted Answer

A)  new supplies of gold were distributed to the banks. 
B)  a national monetary commission was set up. 
C)  the banks were inspected. 
D)  actions were taken to take the US off the gold standard 
E)  Both c and d are correct. 
A)  new supplies of gold were distributed to the banks. 
B)  a national monetary commission was set up. 
C)  the banks were inspected. 
D)  actions were taken to take the US off the gold standard 
E)  Both c and d are correct.

Question 9

In the year after the stock market crash of 1929, stock prices on average ___.

Accepted Answer

A)  were lower than they had been in decades. 
B)  were lower than in 1929 but higher than in the mid-1920s. 
C)  rebounded to a level higher than in 1929. 
D)  cannot be reliably calculated because no buyers could be found for many stocks, and hence no prices were reported. 
A)  were lower than they had been in decades. 
B)  were lower than in 1929 but higher than in the mid-1920s. 
C)  rebounded to a level higher than in 1929. 
D)  cannot be reliably calculated because no buyers could be found for many stocks, and hence no prices were reported.

Question 10

Which of the following most accurately describes the changes in GDP and unemployment between 1929 and 1933?

Accepted Answer

A)  Real GDP changed little but the unemployment rate increased to about 50%. 
B)  Real GDP increased by about 10% and the unemployment rate decreased to about 3%. 
C)  Real GDP decreased by about 30% and the unemployment rate increased to about 25%. 
D)  Both Real GDP and the unemployment dropped significantly. 
A)  Real GDP changed little but the unemployment rate increased to about 50%. 
B)  Real GDP increased by about 10% and the unemployment rate decreased to about 3%. 
C)  Real GDP decreased by about 30% and the unemployment rate increased to about 25%. 
D)  Both Real GDP and the unemployment dropped significantly.

Question 11

According to Walton and Rockoff, the recession of 1937 and 1938 could be attributed to ______ and ______.

Accepted Answer

A)  the decline in world trade fostered by German and Japanese policies of self sufficiency, open market gold sales by the Federal Reserve. 
B)  increases in taxes, open market gold sales by the Federal Reserve. 
C)  increases in taxes, increases in bank required reserve ratios. 
D)  the decline in world trade fostered by German and Japanese policies of self sufficiency, increases in bank required reserve ratios. 
A)  the decline in world trade fostered by German and Japanese policies of self sufficiency, open market gold sales by the Federal Reserve. 
B)  increases in taxes, open market gold sales by the Federal Reserve. 
C)  increases in taxes, increases in bank required reserve ratios. 
D)  the decline in world trade fostered by German and Japanese policies of self sufficiency, increases in bank required reserve ratios.

Question 12

What best describes state fiscal experience in the late 1920s and early 1930s?

Accepted Answer

A)  Revenues dropped consistently through the period because less was being produced. 
B)  State spending decreased through the period. 
C)  The growth in state expenditures exceeded the growth of federal expenditures during the same period. 
D)  States either ran budget surpluses or fairly small deficits. 
A)  Revenues dropped consistently through the period because less was being produced. 
B)  State spending decreased through the period. 
C)  The growth in state expenditures exceeded the growth of federal expenditures during the same period. 
D)  States either ran budget surpluses or fairly small deficits.

Question 13

The aspect of the Second Banking Crisis of the 1930s that distinguished it from the First Banking Crisis was that during the second crisis ___.

Accepted Answer

A)  the Federal Reserve finally decided to act as lender of last resort. 
B)  the stock market boom finally came to an end with the crash. 
C)  banks in all regions of the country failed. 
D)  President Roosevelt asked Congress to establish Federal deposit insurance. 
A)  the Federal Reserve finally decided to act as lender of last resort. 
B)  the stock market boom finally came to an end with the crash. 
C)  banks in all regions of the country failed. 
D)  President Roosevelt asked Congress to establish Federal deposit insurance.

Question 14

In regards to the uncommon length of the Great Depression, both Schumpeter and Higgs contend that

Accepted Answer

A)  private investment remained depressed in part due to the political climate created by the New Deal. 
B)  Social Security and the freedoms granted to labor, along with a progressive tax structure promoted growth in private investment. 
C)  the undistributed profits tax of 1936 encouraged businesses to undertake long-term investments. 
D)  the New Deal rhetoric from President Roosevelt, offered a pro-business slant that offended labor groups. 
A)  private investment remained depressed in part due to the political climate created by the New Deal. 
B)  Social Security and the freedoms granted to labor, along with a progressive tax structure promoted growth in private investment. 
C)  the undistributed profits tax of 1936 encouraged businesses to undertake long-term investments. 
D)  the New Deal rhetoric from President Roosevelt, offered a pro-business slant that offended labor groups.

Question 15

During the Federal Bank Holiday ordered by President Roosevelt

Accepted Answer

A)  new supplies of gold were distributed to the banks. 
B)  a national monetary commission was set up. 
C)  the banks were inspected. 
D)  the leadership of the Federal Reserve System was replaced. 
A)  new supplies of gold were distributed to the banks. 
B)  a national monetary commission was set up. 
C)  the banks were inspected. 
D)  the leadership of the Federal Reserve System was replaced.

Question 16

What best describes US federal fiscal experience in the late 1920s and early 1930s?

Accepted Answer

A)  Revenues collected increased rapidly through the period. 
B)  A balanced budget was maintained for most of the Depression. 
C)  Tax rates were consistently lowered to spur economic growth. 
D)  Expenditures grew by over 300% from 1929 to 1940. 
A)  Revenues collected increased rapidly through the period. 
B)  A balanced budget was maintained for most of the Depression. 
C)  Tax rates were consistently lowered to spur economic growth. 
D)  Expenditures grew by over 300% from 1929 to 1940.

Question 17

In the year after the stock market crash of 1929, stock prices on average ___.

Accepted Answer

A)  were lower than they had been in decades. 
B)  were lower than in 1929 but higher than in the mid-1920s. 
C)  rebounded to a level higher than in 1929. 
D)  cannot be reliably calculated because no buyers could be found for many stocks, and hence no prices were reported. 
A)  were lower than they had been in decades. 
B)  were lower than in 1929 but higher than in the mid-1920s. 
C)  rebounded to a level higher than in 1929. 
D)  cannot be reliably calculated because no buyers could be found for many stocks, and hence no prices were reported.

Question 18

What best explains the pattern of bank collapses in the US?

Accepted Answer

A)  The vast majority of banks closed early in the decade and the closing dropped significantly in the latter half of the decade. 
B)  Banks collapsed consistently throughout the 1930s 
C)  The failure rate was relatively low early in the decade and grew steadily throughout the period. 
A)  The vast majority of banks closed early in the decade and the closing dropped significantly in the latter half of the decade. 
B)  Banks collapsed consistently throughout the 1930s 
C)  The failure rate was relatively low early in the decade and grew steadily throughout the period.

Question 19

Which was not a factor in causing the Great Depression?

Accepted Answer

A)  the end of a boom in construction 
B)  the crash of the stock market 
C)  a struggling agriculture sector 
D)  structural weakness in the banking system 
E)  All of the above were factors causing the Great Depression. 
A)  the end of a boom in construction 
B)  the crash of the stock market 
C)  a struggling agriculture sector 
D)  structural weakness in the banking system 
E)  All of the above were factors causing the Great Depression.

Question 20

The failure of the Bank of the United States in December 1930 probably intensified the banking panic for each of the following reasons except that it proved that ___

Accepted Answer

A)  the Fed might fail to act as a lender of last resort. 
B)  big banks could fail. 
C)  New York Banks could fail. 
D)  that Wall Street banks could fail. 
A)  the Fed might fail to act as a lender of last resort. 
B)  big banks could fail. 
C)  New York Banks could fail. 
D)  that Wall Street banks could fail.

Exam 23: The Great Depression

During the Great Depression, real GDP decreased by roughly ____ percent and unemployment rose to roughly ____ percent.

Walton and Rockoff contend that the likelihood of a Great Depression happening again is _______ because (among other reasons) _______.

Between 1929 and 1933, nominal interest rates ___, and real interest rates ___.

The first banking crisis of the 1930s was probably caused by

During the Great Depression, one reason the Federal Reserve did not respond forcefully was the "free gold problem," which refers to the idea that ___.

The Stock Market Crash of 1929 probably contributed ____ to the Great Depression because _____.

Anna Schwatz and Milton Friedman have argued that the Great Depression was caused by

During the Federal Bank Holiday ordered by President Roosevelt and the week that followed it,

In the year after the stock market crash of 1929, stock prices on average ___.

Which of the following most accurately describes the changes in GDP and unemployment between 1929 and 1933?

According to Walton and Rockoff, the recession of 1937 and 1938 could be attributed to ______ and ______.

What best describes state fiscal experience in the late 1920s and early 1930s?

The aspect of the Second Banking Crisis of the 1930s that distinguished it from the First Banking Crisis was that during the second crisis ___.

In regards to the uncommon length of the Great Depression, both Schumpeter and Higgs contend that

During the Federal Bank Holiday ordered by President Roosevelt

What best describes US federal fiscal experience in the late 1920s and early 1930s?

In the year after the stock market crash of 1929, stock prices on average ___.

What best explains the pattern of bank collapses in the US?

Which was not a factor in causing the Great Depression?

The failure of the Bank of the United States in December 1930 probably intensified the banking panic for each of the following reasons except that it proved that ___

Growth, Welfare, and the American Economy

Founding the Colonies

Colonial Economic Activities

The Economic Relations of the Colonies

Economic Progress and Wealth

Three Crises and Revolt

Hard Realities for a New Nation

Land and the Early Westward Movements

Transportation and Market Growth

Market Expansion and Industry in First Transition

Labor During the Early Industrial Period

Money and Banking in the Developing Economy

The Entrenchment of Slavery and Regional Conflict

War, Recovery, and Regional Divergence

Agricultures Western Advance

Railroads and Economic Change

Industrial Expansion and Concentration

The Emergence of Americas Labor Consciousness

Money, Prices, and Finance in the Postbellum Era

Commerce at Home and Abroad

World War I, 1914-1918

The Roaring Twenties

The New Deal

World War Ii

The Changing Role of the Federal Government

The Changing Role of the Federal Government: Consumer Safety, Agriculture, the Environment, and Housing

Monetary Policy, Fiscal Policy, and the Business Cycle After World War Ii

Manufacturing, Productivity, and Labor

Achievements of the Past, Challenges for the Future

Filters

During the Great Depression, real GDP decreased by roughly percent and unemployment rose to roughly percent.

Walton and Rockoff contend that the likelihood of a Great Depression happening again is _ because (among other reasons) _.

Between 1929 and 1933, nominal interest rates _, and real interest rates _.

The Stock Market Crash of 1929 probably contributed to the Great Depression because _.

According to Walton and Rockoff, the recession of 1937 and 1938 could be attributed to and .