Question 1

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. E

Question 2

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. A

Question 3

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. C

Question 4

In regards to the uncommon length of the Great Depression,both Shumpter 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 5

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 6

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 7

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 8

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 9

John Maynard Keynes attributed the "stickiness" of real wages in the early years of the depression to ______.

Accepted Answer

A) the fall in the money supply. 
B) the tendency of people to cut wages slowly while looking for a job. 
C) the tendency of employers to ruthlessly replace long-time employees with the
Unemployed. 
D) resistance by workers,especially unionized workers,to wage cuts. 
A) the fall in the money supply. 
B) the tendency of people to cut wages slowly while looking for a job. 
C) the tendency of employers to ruthlessly replace long-time employees with the
Unemployed. 
D) resistance by workers,especially unionized workers,to wage cuts.

Question 10

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

Question 11

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 12

Andrea Schwatz has 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 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

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.

Question 15

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 16

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 17

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 18

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 19

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 20

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.

Exam 23: The Great Depression

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

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

During the Federal Bank Holiday ordered by President Roosevelt

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

The Smoot-Hawley Tariff

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

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

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

John Maynard Keynes attributed the "stickiness" of real wages in the early years of the depression to ______.

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

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 ____.

Andrea Schwatz has argued that the Great Depression was caused by

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

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

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

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

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

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

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

During the 1930s,

Economic History

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 Western Movements

Transportation and Market Growth

Market Expansion 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

Mobilizing for War

The Roaring Twenties

The New Deal

World War II

The Changing Role of the Federal Government

Government 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.

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

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