Question 1

During the 1930s,

Accepted Answer

A)  ordinary citizens were not allowed to hold gold. 
B)  the US government fixed the price at which the Treasury would by and sell gold. 
C)  production of gold soared. 
D)  All of the above are correct. 
E)  Only a and b are correct. 
A)  ordinary citizens were not allowed to hold gold. 
B)  the US government fixed the price at which the Treasury would by and sell gold. 
C)  production of gold soared. 
D)  All of the above are correct. 
E)  Only a and b are correct.

Question 2

Britain 's departure from the gold standard in September 1931 ____ bank closures in the United States because ____.

Accepted Answer

A)  decreased, the British decided to invest their gold in the U.S. 
B)  increased, anyone who wanted gold had to withdraw it from U.S. banks. 
C)  decreased, Britain could now follow expansionary monetary policies at home. 
D)  increased, people realized that the United States was about to "bail out" Britain with large loans. 
A)  decreased, the British decided to invest their gold in the U.S. 
B)  increased, anyone who wanted gold had to withdraw it from U.S. banks. 
C)  decreased, Britain could now follow expansionary monetary policies at home. 
D)  increased, people realized that the United States was about to "bail out" Britain with large loans.

Question 3

The Smoot-Hawley Tariff

Accepted Answer

A)  was a major cause of the Great Depression. 
B)  was the last of America's high "protective" tariffs. 
C)  made a bad situation slightly worse. 
D)  caused a psychological effect that destroyed the banking system. 
E)  Only b and c are correct. 
A)  was a major cause of the Great Depression. 
B)  was the last of America's high "protective" tariffs. 
C)  made a bad situation slightly worse. 
D)  caused a psychological effect that destroyed the banking system. 
E)  Only b and c are correct.

Question 4

Monetarists such as Milton Friedman blame the Great Depression primarily (although not completely) on ___.

Accepted Answer

A)  the stock market crash. 
B)  the Bank Holiday. 
C)  the decline in investment spending. 
D)  the waves of bank failures 
A)  the stock market crash. 
B)  the Bank Holiday. 
C)  the decline in investment spending. 
D)  the waves of bank failures

Question 5

At its maximum during the Great Depression unemployment reached approximately ___ percent of the labor force?

Accepted Answer

A)  15 
B)  25 
C)  50 
D)  75 
A)  15 
B)  25 
C)  50 
D)  75

Question 6

Which of the following "quotations", according to chapter 23, best summarizes Keynes conclusions about the lessons of the depression for the nature of capitalism.

Accepted Answer

A)  "It is in determining the volume, not the direction, of actual employment that the existing system has broken down." 
B)  "An economic system that forgets to find work for millions of men and women, cannot be trusted to perform any task in an intelligent fashion." 
C)  "The depression is essentially a problem of reliance on a private banking system for the provision of an inherently public good, money." 
D)  "The rules of sound finance, namely stable prices and balanced budgets, apply as much to the present crisis, as they do in more pleasant times." 
A)  "It is in determining the volume, not the direction, of actual employment that the existing system has broken down." 
B)  "An economic system that forgets to find work for millions of men and women, cannot be trusted to perform any task in an intelligent fashion." 
C)  "The depression is essentially a problem of reliance on a private banking system for the provision of an inherently public good, money." 
D)  "The rules of sound finance, namely stable prices and balanced budgets, apply as much to the present crisis, as they do in more pleasant times."

Question 7

According to Walton and Rockoff, Keynesian economists would probably argue that Keynesian policies failed to alleviate the Great Depression because _____.

Accepted Answer

A)  monetary policy was contractionary. 
B)  government spending was disproportionately concentrated on poor relief. 
C)  supply-side shocks offset Keynesian policies. 
D)  Keynesian policies were never tried on a sufficient scale. 
A)  monetary policy was contractionary. 
B)  government spending was disproportionately concentrated on poor relief. 
C)  supply-side shocks offset Keynesian policies. 
D)  Keynesian policies were never tried on a sufficient scale.

Question 8

In the United States in the 1920s, there were many bank failures in ___ areas, as the result of ___.

Accepted Answer

A)  rural, high levels of indebtedness taken on in WWI. 
B)  rural, pro-urban Federal spending policies. 
C)  urban, lack of demand from the lower middle class for industrial products. 
D)  urban, pro-rural Federal spending policies. 
A)  rural, high levels of indebtedness taken on in WWI. 
B)  rural, pro-urban Federal spending policies. 
C)  urban, lack of demand from the lower middle class for industrial products. 
D)  urban, pro-rural Federal spending policies.

Question 9

Walton and Rockoff contend that a repetition of the Great Depression is unlikely for all of the following reasons except ____.

Accepted Answer

A)  the Federal Reserve is unlikely to repeat the mistakes it made in the 1930s. 
B)  the private sector is less vulnerable now because the industrial sector is relatively smaller. 
C)  government programs exist that would ameliorate suffering and inhibit the spread of a crippling panic. 
D)  the public is unlikely, even in a depression, to vote for a radical government that would frighten business and inhibit investment, the way it did in the 1930s. 
A)  the Federal Reserve is unlikely to repeat the mistakes it made in the 1930s. 
B)  the private sector is less vulnerable now because the industrial sector is relatively smaller. 
C)  government programs exist that would ameliorate suffering and inhibit the spread of a crippling panic. 
D)  the public is unlikely, even in a depression, to vote for a radical government that would frighten business and inhibit investment, the way it did in the 1930s.

Question 10

Some have argued that the Federal Reserve looked at the wrong indicator of monetary policy, and that the Fed mistakenly thought that monetary policy was "easy" because ______.

Accepted Answer

A)  the stock of money had grown rapidly. 
B)  the monetary base had grown rapidly. 
C)  market interest rates were low. 
D)  bank reserve ratios were low. 
A)  the stock of money had grown rapidly. 
B)  the monetary base had grown rapidly. 
C)  market interest rates were low. 
D)  bank reserve ratios were low.

Question 11

According to Walton and Rockoff, which of the following was the most important in bringing the banking crises of the 1930s to an end?

Accepted Answer

A)  the elimination of many weak banks through bankruptcy (survival of the fittest). 
B)  the promise of federal bank deposit insurance. 
C)  New Deal spending programs. 
D)  World War II. 
A)  the elimination of many weak banks through bankruptcy (survival of the fittest). 
B)  the promise of federal bank deposit insurance. 
C)  New Deal spending programs. 
D)  World War II.

Question 12

According to Fed Chairman Bernanke's analysis of the Depression-era financial system,

Accepted Answer

A)  bank lending was often based on long-term relationships between banks and customers 
B)  after the banking system collapsed, it recovered quickly due to government intervention. 
C)  bank lending at large was a severely depersonalized endeavor by 1925, which caused risky loan practices. 
D)  Both a and b are correct. 
A)  bank lending was often based on long-term relationships between banks and customers 
B)  after the banking system collapsed, it recovered quickly due to government intervention. 
C)  bank lending at large was a severely depersonalized endeavor by 1925, which caused risky loan practices. 
D)  Both a and b are correct.

Question 13

What is the most compelling evidence for the Keynesian interpretation of the Great Depression?

Accepted Answer

A)  Increases in both the interest rate and the quantity of money. 
B)  Decreases in both the interest rate and the quantity of money 
C)  An increase in the interest rate and a decrease in the quantity of money. 
D)  A decrease in the interest rate and an increase in the quantity of money. 
A)  Increases in both the interest rate and the quantity of money. 
B)  Decreases in both the interest rate and the quantity of money 
C)  An increase in the interest rate and a decrease in the quantity of money. 
D)  A decrease in the interest rate and an increase in the quantity of money.

Question 14

One reason the Federal Reserve Board in Washington did not act as a lender of last resort during the early years of the Great Depression, was its power struggle with ____.

Accepted Answer

A)  U.S. Treasury. 
B)  foreign central banks. 
C)  Federal Reserve Bank of New York. 
D)  President Roosevelt. 
A)  U.S. Treasury. 
B)  foreign central banks. 
C)  Federal Reserve Bank of New York. 
D)  President Roosevelt.

Question 15

What is the best description of the US economy from 1929-1940?

Accepted Answer

A)  GNP decreased continually during the greatest Depression our nation has known. 
B)  The economy suffered a large drop from 1929-1933, but then grew steadily through WW II. 
C)  The economy suffered an initial drop, a four-year expansion and then another drop towards the end of the decade. 
D)  The unemployment rate increased steadily throughout the period. 
A)  GNP decreased continually during the greatest Depression our nation has known. 
B)  The economy suffered a large drop from 1929-1933, but then grew steadily through WW II. 
C)  The economy suffered an initial drop, a four-year expansion and then another drop towards the end of the decade. 
D)  The unemployment rate increased steadily throughout the period.

Question 16

According to the Keynesian interpretation of the 1930's, the main reason we still had double digit unemployment in 1939 was that

Accepted Answer

A)  interest rates were too high. 
B)  federal budget deficits were too small. 
C)  the stock of money was too small. 
D)  investment spending was too high. 
A)  interest rates were too high. 
B)  federal budget deficits were too small. 
C)  the stock of money was too small. 
D)  investment spending was too high.

Question 17

During the 1930s, banks found it hard to solve the asymmetric information problem between borrowers and lenders, because ____.

Accepted Answer

A)  Many borrowers lacked adequate collateral. 
B)  Changing federal bank regulations created uncertainty 
C)  The fall in the stock of money reduced aggregate demand. 
D)  Interest rates had fallen to "liquidity trap" levels. 
A)  Many borrowers lacked adequate collateral. 
B)  Changing federal bank regulations created uncertainty 
C)  The fall in the stock of money reduced aggregate demand. 
D)  Interest rates had fallen to "liquidity trap" levels.

Question 18

Cole and Ohanian attribute the persistence of mass unemployment to

Accepted Answer

A)  the lack of federal spending 
B)  the "stickiness" of real wages. 
C)  the rise in the money supply during the New Deal. 
D)  the fiscal recklessness of state governments. 
A)  the lack of federal spending 
B)  the "stickiness" of real wages. 
C)  the rise in the money supply during the New Deal. 
D)  the fiscal recklessness of state governments.

Exam 23: The Great Depression

During the 1930s,

Britain 's departure from the gold standard in September 1931 ____ bank closures in the United States because ____.

The Smoot-Hawley Tariff

Monetarists such as Milton Friedman blame the Great Depression primarily (although not completely) on ___.

At its maximum during the Great Depression unemployment reached approximately ___ percent of the labor force?

Which of the following "quotations", according to chapter 23, best summarizes Keynes conclusions about the lessons of the depression for the nature of capitalism.

According to Walton and Rockoff, Keynesian economists would probably argue that Keynesian policies failed to alleviate the Great Depression because _____.

In the United States in the 1920s, there were many bank failures in ___ areas, as the result of ___.

Walton and Rockoff contend that a repetition of the Great Depression is unlikely for all of the following reasons except ____.

Some have argued that the Federal Reserve looked at the wrong indicator of monetary policy, and that the Fed mistakenly thought that monetary policy was "easy" because ______.

According to Walton and Rockoff, which of the following was the most important in bringing the banking crises of the 1930s to an end?

According to Fed Chairman Bernanke's analysis of the Depression-era financial system,

What is the most compelling evidence for the Keynesian interpretation of the Great Depression?

One reason the Federal Reserve Board in Washington did not act as a lender of last resort during the early years of the Great Depression, was its power struggle with ____.

What is the best description of the US economy from 1929-1940?

According to the Keynesian interpretation of the 1930's, the main reason we still had double digit unemployment in 1939 was that

During the 1930s, banks found it hard to solve the asymmetric information problem between borrowers and lenders, because ____.

Cole and Ohanian attribute the persistence of mass unemployment to

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

Britain 's departure from the gold standard in September 1931 bank closures in the United States because .

In the United States in the 1920s, there were many bank failures in _ areas, as the result of _.