Question 1

Which of the following best describes Japan's fiscal policy response to the recession in the 1990s?

Accepted Answer

A) Japan tried to stimulate the economy through a series of tax rate reductions as suggested by supply-side economics. 
B) Japan reduced government spending as a share of the economy,and the central government balanced its budget annually. 
C) Japan expanded government spending as a share of the economy and financed the spending with budget deficits and increased borrowing. 
D) Japan maintained a balanced budget during the 1990s,just as the U.S.did during the Great Depression. 
A) Japan tried to stimulate the economy through a series of tax rate reductions as suggested by supply-side economics. 
B) Japan reduced government spending as a share of the economy,and the central government balanced its budget annually. 
C) Japan expanded government spending as a share of the economy and financed the spending with budget deficits and increased borrowing. 
D) Japan maintained a balanced budget during the 1990s,just as the U.S.did during the Great Depression. C

Question 2

Why are the 1990s sometimes referred to as Japan's "lost decade"?

Accepted Answer

A) Similar to the Great Depression in the U.S. ,Japan's unemployment remained at double-digit levels throughout the 1990s. 
B) The Japanese were reluctant to use fiscal policy to stimulate aggregate demand,which would have prompted an economic recovery. 
C) Following the stock market crash of 1990,GDP was persistently weak throughout the decade,only growing at a rate of about 1 percent. 
D) Despite the strong economic growth during the decade,stock market prices have not recovered. 
A) Similar to the Great Depression in the U.S. ,Japan's unemployment remained at double-digit levels throughout the 1990s. 
B) The Japanese were reluctant to use fiscal policy to stimulate aggregate demand,which would have prompted an economic recovery. 
C) Following the stock market crash of 1990,GDP was persistently weak throughout the decade,only growing at a rate of about 1 percent. 
D) Despite the strong economic growth during the decade,stock market prices have not recovered. C

Question 3

Why are U.S.housing and stock prices unlikely to rebound quickly from the recession of 2008-2009?

Accepted Answer

A) Restrictive monetary policy will place downward pressure on asset prices. 
B) Lack of sufficient stimulus will decrease demand for housing and other assets. 
C) It will take time to correct the mal-investment generated by the run-up in housing prices. 
D) Based on Japan's experience of the 1990s,asset prices are likely to rebound quickly. 
A) Restrictive monetary policy will place downward pressure on asset prices. 
B) Lack of sufficient stimulus will decrease demand for housing and other assets. 
C) It will take time to correct the mal-investment generated by the run-up in housing prices. 
D) Based on Japan's experience of the 1990s,asset prices are likely to rebound quickly. C

Question 4

Both Japan in the 1990s and the U.S.during the Great Depression followed a restrictive monetary policy,because

Accepted Answer

A) all the leading indicators,such as the money supply and price levels,suggested that this policy was effective. 
B) most economists believed the restrictive monetary policy was the correct response to a recession. 
C) when an expansionary monetary policy was briefly followed,both employment and GDP declined. 
D) key policy-makers thought low interest rates indicated that monetary policy was highly expansionary. 
A) all the leading indicators,such as the money supply and price levels,suggested that this policy was effective. 
B) most economists believed the restrictive monetary policy was the correct response to a recession. 
C) when an expansionary monetary policy was briefly followed,both employment and GDP declined. 
D) key policy-makers thought low interest rates indicated that monetary policy was highly expansionary.

Question 5

The "catch up phenomenon" refers to

Accepted Answer

A) the ability of an economy to recover from a severe recession. 
B) the ability of lower income countries to grow rapidly by emulating the practices and technology of higher income countries. 
C) the likelihood of a sharp decline in asset and stock market prices following a prolonged period of economic growth. 
D) the failure of low-income countries to catch up with high-income countries because no country can sustain economic growth over long periods of time. 
A) the ability of an economy to recover from a severe recession. 
B) the ability of lower income countries to grow rapidly by emulating the practices and technology of higher income countries. 
C) the likelihood of a sharp decline in asset and stock market prices following a prolonged period of economic growth. 
D) the failure of low-income countries to catch up with high-income countries because no country can sustain economic growth over long periods of time.

Question 6

Demographic and economic analysis indicates that as a nation's population age 65 and older

Accepted Answer

A) declines,the tax burden on the current work force will increase. 
B) expands,the tax burden on the current work force will decrease. 
C) expands,the overall productivity of the population will increase. 
D) expands,the overall productivity of the population will decline. 
A) declines,the tax burden on the current work force will increase. 
B) expands,the tax burden on the current work force will decrease. 
C) expands,the overall productivity of the population will increase. 
D) expands,the overall productivity of the population will decline.

Question 7

Between 1990 and 2010,the population age 65 years and older in Japan,

Accepted Answer

A) almost doubled,expanding from 12 percent to approximately 23 percent. 
B) rose slightly from 13 percent to almost 16 percent. 
C) remained relatively constant at around 20 percent. 
D) declined from 20 percent to less than 15 percent. 
A) almost doubled,expanding from 12 percent to approximately 23 percent. 
B) rose slightly from 13 percent to almost 16 percent. 
C) remained relatively constant at around 20 percent. 
D) declined from 20 percent to less than 15 percent.

Question 8

As the elderly population of a nation expands as a share of the total,

Accepted Answer

A) government expenditures on health care and retirement programs will generally decline. 
B) economic growth is likely to slow because of a slowdown in the growth of productivity and higher taxes on current workers. 
C) economic growth is likely to increase because the retirement of older workers will create high-paying jobs for younger workers. 
D) government spending as a share of the economy in high-income countries like the United States will tend to fall. 
A) government expenditures on health care and retirement programs will generally decline. 
B) economic growth is likely to slow because of a slowdown in the growth of productivity and higher taxes on current workers. 
C) economic growth is likely to increase because the retirement of older workers will create high-paying jobs for younger workers. 
D) government spending as a share of the economy in high-income countries like the United States will tend to fall.

Question 9

Which of the following is a similarity between the Japanese experience of the 1990s and the U.S.economic downturn in 2008-2009?

Accepted Answer

A) A rapid increase in real estate prices preceded the economic troubles. 
B) An economic bust of real estate prices and a drop in stock market prices contributed to both downturns. 
C) A flood of loan defaults that created huge problems for the banking and financial sectors were present during both downturns. 
D) All of the above. 
A) A rapid increase in real estate prices preceded the economic troubles. 
B) An economic bust of real estate prices and a drop in stock market prices contributed to both downturns. 
C) A flood of loan defaults that created huge problems for the banking and financial sectors were present during both downturns. 
D) All of the above.

Question 10

Both Japan and Canada experienced a severe economic slowdown during the 1990s.The fiscal policy responses of the two countries were

Accepted Answer

A) virtually the same: both substantially increased government spending and ran large budget deficits. 
B) virtually the same: both reduced government spending as a share of the economy and shifted the budget toward a surplus. 
C) dramatically different: Japan sharply increased government spending and ran large budget deficits,while Canada reduced government spending as a share of the economy and shifted the budget toward a surplus. 
D) dramatically different: Japan reduced government spending as a share of the economy and shifted the budget toward a surplus,while Canada increased government spending and ran large budget deficits. 
A) virtually the same: both substantially increased government spending and ran large budget deficits. 
B) virtually the same: both reduced government spending as a share of the economy and shifted the budget toward a surplus. 
C) dramatically different: Japan sharply increased government spending and ran large budget deficits,while Canada reduced government spending as a share of the economy and shifted the budget toward a surplus. 
D) dramatically different: Japan reduced government spending as a share of the economy and shifted the budget toward a surplus,while Canada increased government spending and ran large budget deficits.

Question 11

Workers in a labor force of a highly skilled country,like Japan or the United States,usually reach their productive peak

Accepted Answer

A) during their teen-age years,when they are young and being educated. 
B) during their 20s,when they are still young and strong. 
C) in their 40s and 50s,when they have a balance between education and experience. 
D) in their 60s,just before retirement. 
A) during their teen-age years,when they are young and being educated. 
B) during their 20s,when they are still young and strong. 
C) in their 40s and 50s,when they have a balance between education and experience. 
D) in their 60s,just before retirement.

Question 12

When a company or industry is subsidized because it is not profitable,a secondary effect of the subsidies will likely be that

Accepted Answer

A) jobs will be saved,so the subsidies will promote economic efficiency. 
B) resources that are used unproductively will remain in low productivity areas. 
C) the company or industry will stabilize and become profitable. 
D) the subsidies will direct resources toward highly productive projects. 
A) jobs will be saved,so the subsidies will promote economic efficiency. 
B) resources that are used unproductively will remain in low productivity areas. 
C) the company or industry will stabilize and become profitable. 
D) the subsidies will direct resources toward highly productive projects.

Question 13

The Japanese experience of the 1990s indicates that

Accepted Answer

A) restrictive monetary policy during a recovery will prevent inflation and promote stable economic growth. 
B) increases in government spending will promote a faster and stronger recovery from an economic recession. 
C) housing and stock prices are unlikely to rebound quickly when the economy moves toward recovery. 
D) large budget deficits and temporary tax cuts will stimulate aggregate demand and real output. 
A) restrictive monetary policy during a recovery will prevent inflation and promote stable economic growth. 
B) increases in government spending will promote a faster and stronger recovery from an economic recession. 
C) housing and stock prices are unlikely to rebound quickly when the economy moves toward recovery. 
D) large budget deficits and temporary tax cuts will stimulate aggregate demand and real output.

Question 14

Which of the following is a similarity between the Japanese experience of the 1990s and the U.S.in 2008-2009?

Accepted Answer

A) Both responded to an economic downturn with higher taxes designed to balance the budget. 
B) Both responded to an economic downturn with reductions in government spending designed to balance the budget. 
C) Both responded to an economic downturn with expansionary fiscal policy. 
D) Both responded to an economic downturn with expansionary monetary policy. 
A) Both responded to an economic downturn with higher taxes designed to balance the budget. 
B) Both responded to an economic downturn with reductions in government spending designed to balance the budget. 
C) Both responded to an economic downturn with expansionary fiscal policy. 
D) Both responded to an economic downturn with expansionary monetary policy.

Question 15

Which of the following occurred in Canada during the latter part of the 1990s?

Accepted Answer

A) Increases in government spending and larger budget deficits as a share of the economy. 
B) Reductions in government spending that led to the loss of political control by the Liberal Party. 
C) A tax increase that balanced the budget without reductions in government spending as a share of the economy. 
D) Reductions in government spending as a share of the economy and shift of the government budget to a surplus. 
A) Increases in government spending and larger budget deficits as a share of the economy. 
B) Reductions in government spending that led to the loss of political control by the Liberal Party. 
C) A tax increase that balanced the budget without reductions in government spending as a share of the economy. 
D) Reductions in government spending as a share of the economy and shift of the government budget to a surplus.

Question 16

Which of the following is indicative of Japan's expansionary fiscal policy during the 1990s?

Accepted Answer

A) a shift from budget deficits to budget surpluses during the 1990s 
B) a decrease in government spending as a share of GDP during the 1990s 
C) an increase in tax rates during the 1990s 
D) a shift from budget surpluses to budget deficits during the 1990s 
A) a shift from budget deficits to budget surpluses during the 1990s 
B) a decrease in government spending as a share of GDP during the 1990s 
C) an increase in tax rates during the 1990s 
D) a shift from budget surpluses to budget deficits during the 1990s

Question 17

Which of the following was true of Japan during the 1990s?

Accepted Answer

A) Japan followed an expansionary fiscal policy but it did not lead to a quick recovery. 
B) Japan followed an expansionary monetary policy,but it did not lead to a quick recovery. 
C) The monetary policy of Japan during the 1990s was highly expansionary. 
D) The fiscal policy of Japan during the 1990s was highly restrictive. 
A) Japan followed an expansionary fiscal policy but it did not lead to a quick recovery. 
B) Japan followed an expansionary monetary policy,but it did not lead to a quick recovery. 
C) The monetary policy of Japan during the 1990s was highly expansionary. 
D) The fiscal policy of Japan during the 1990s was highly restrictive.

Question 18

Based on Japan's experience during the 1990s,which of the following is most likely to slow the long-term growth of the U.S.?

Accepted Answer

A) the restrictive monetary policy of the Fed in 2008 and 2009 
B) the aging of the U.S.population 
C) the lack of stimulus packages designed to increase aggregate demand 
D) the government's policy of maintaining a balanced budget 
A) the restrictive monetary policy of the Fed in 2008 and 2009 
B) the aging of the U.S.population 
C) the lack of stimulus packages designed to increase aggregate demand 
D) the government's policy of maintaining a balanced budget

Question 19

Which of the following is true with regard to the use of monetary policy to combat a recession?

Accepted Answer

A) The Fed's monetary policy has been expansionary in response to the 2008-2009 recession,despite the poor results from Japan's expansionary monetary policy during the 1990s. 
B) Monetary policy lags are relatively short and predictable,so the results of expansionary monetary policy should be quickly evident. 
C) Frequent monetary policy changes will promote economic stability,so the Fed must constantly alter its policy to correspond with changing economic conditions. 
D) If monetary policy makers turn toward restriction too quickly or stay with the expansionary policy too long,it can throw the economy back into recession or generate future inflation. 
A) The Fed's monetary policy has been expansionary in response to the 2008-2009 recession,despite the poor results from Japan's expansionary monetary policy during the 1990s. 
B) Monetary policy lags are relatively short and predictable,so the results of expansionary monetary policy should be quickly evident. 
C) Frequent monetary policy changes will promote economic stability,so the Fed must constantly alter its policy to correspond with changing economic conditions. 
D) If monetary policy makers turn toward restriction too quickly or stay with the expansionary policy too long,it can throw the economy back into recession or generate future inflation.

Question 20

As the U.S.recovers from the 2008-2009 recession,asset prices are not likely to rebound quickly

Accepted Answer

A) even though asset prices did rebound quickly in Japan during the 1990s. 
B) because it will take time to correct the mal-investment in the housing market. 
C) because there are not enough loanable funds in the banking system due to restrictive monetary policy. 
D) because the supply of housing will be unable to keep up with demand,as was the case in Japan during the 1990s. 
A) even though asset prices did rebound quickly in Japan during the 1990s. 
B) because it will take time to correct the mal-investment in the housing market. 
C) because there are not enough loanable funds in the banking system due to restrictive monetary policy. 
D) because the supply of housing will be unable to keep up with demand,as was the case in Japan during the 1990s.

Exam 35: Lessons From Japan and Canada

Which of the following best describes Japan's fiscal policy response to the recession in the 1990s?

Why are the 1990s sometimes referred to as Japan's "lost decade"?

Why are U.S.housing and stock prices unlikely to rebound quickly from the recession of 2008-2009?

Both Japan in the 1990s and the U.S.during the Great Depression followed a restrictive monetary policy,because

The "catch up phenomenon" refers to

Demographic and economic analysis indicates that as a nation's population age 65 and older

Between 1990 and 2010,the population age 65 years and older in Japan,

As the elderly population of a nation expands as a share of the total,

Which of the following is a similarity between the Japanese experience of the 1990s and the U.S.economic downturn in 2008-2009?

Both Japan and Canada experienced a severe economic slowdown during the 1990s.The fiscal policy responses of the two countries were

Workers in a labor force of a highly skilled country,like Japan or the United States,usually reach their productive peak

When a company or industry is subsidized because it is not profitable,a secondary effect of the subsidies will likely be that

The Japanese experience of the 1990s indicates that

Which of the following is a similarity between the Japanese experience of the 1990s and the U.S.in 2008-2009?

Which of the following occurred in Canada during the latter part of the 1990s?

Which of the following is indicative of Japan's expansionary fiscal policy during the 1990s?

Which of the following was true of Japan during the 1990s?

Based on Japan's experience during the 1990s,which of the following is most likely to slow the long-term growth of the U.S.?

Which of the following is true with regard to the use of monetary policy to combat a recession?

As the U.S.recovers from the 2008-2009 recession,asset prices are not likely to rebound quickly

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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