Question 1

The threat of a Greek exit from the euro system

Accepted Answer

A) led to the exit of Spain from the euro. 
B) increased the viability of the Greek exit. 
C) spurred economic activity in Greece. 
D) left Greek banks bankrupt. 
A) led to the exit of Spain from the euro. 
B) increased the viability of the Greek exit. 
C) spurred economic activity in Greece. 
D) left Greek banks bankrupt.

Question 2

Which of the following organizations was the predecessor to the European Union?

Accepted Answer

A) Assembly of European Regions 
B) Council of Europe 
C) European Economic Community 
D) Central European Free Trade Agreement 
A) Assembly of European Regions 
B) Council of Europe 
C) European Economic Community 
D) Central European Free Trade Agreement

Question 3

In which year did long-term interest rates in Greece rise to an all-time high of close to 30%?

Accepted Answer

A) 2003 
B) 2005 
C) 2009 
D) 2011 
A) 2003 
B) 2005 
C) 2009 
D) 2011

Question 4

Which of the following European countries used fiscal policy to induce explosions in deficits to mitigate recession?

Accepted Answer

A) France 
B) Germany 
C) Italy 
D) Spain 
A) France 
B) Germany 
C) Italy 
D) Spain

Question 5

Which of the following would result if Greece decided to order all Greek banks to convert euro-denominated accounts to drachma-denominated accounts?

Accepted Answer

A) A deflation would occur in the economy of Greece. 
B) The purchasing power of drachma would decline. 
C) The value of euros would decline relative to the value of drachmas. 
D) Domestic consumers in Greece would prefer imported goods. 
A) A deflation would occur in the economy of Greece. 
B) The purchasing power of drachma would decline. 
C) The value of euros would decline relative to the value of drachmas. 
D) Domestic consumers in Greece would prefer imported goods.

Question 6

In which year did GDP growth in Greece fall below -6 percent?

Accepted Answer

A) 2003 
B) 2005 
C) 2009 
D) 2011 
A) 2003 
B) 2005 
C) 2009 
D) 2011

Question 7

Greece did not engage in expansionary monetary policy to pull out of recession because

Accepted Answer

A) it does not have its own central bank to use its own monetary policy. 
B) it used powerful fiscal policy tools and did not feel the need to use monetary policy tools. 
C) it was bailed out by Germany. 
D) it opted out of the European Union. 
A) it does not have its own central bank to use its own monetary policy. 
B) it used powerful fiscal policy tools and did not feel the need to use monetary policy tools. 
C) it was bailed out by Germany. 
D) it opted out of the European Union.

Question 8

_____ were the main sources of mortgage loans in Europe between 2000 and 2009?

Accepted Answer

A) Covered bonds 
B) Treasury bonds 
C) Eurobonds 
D) Global bonds 
A) Covered bonds 
B) Treasury bonds 
C) Eurobonds 
D) Global bonds

Question 9

Which of the following statements is true of austerity?

Accepted Answer

A) It increases economic activity. 
B) It increases tax revenues. 
C) It increases job opportunities. 
D) It could increase the demand for social safety nets. 
A) It increases economic activity. 
B) It increases tax revenues. 
C) It increases job opportunities. 
D) It could increase the demand for social safety nets.

Question 10

Which of the following reasons promoted lending to the poorer member countries in the European Union during 2001-2007?

Accepted Answer

A) The long-term interest rates in the poorer countries were as low as the interest rates in the richer member countries. 
B) The investment in human capital in the poorer countries was higher than the investment in the richer countries. 
C) The debt to GDP ratio was much lower in the poorer countries than in the richer countries. 
D) The poorer countries experienced lower rates of inflation than the richer countries. 
A) The long-term interest rates in the poorer countries were as low as the interest rates in the richer member countries. 
B) The investment in human capital in the poorer countries was higher than the investment in the richer countries. 
C) The debt to GDP ratio was much lower in the poorer countries than in the richer countries. 
D) The poorer countries experienced lower rates of inflation than the richer countries.

Question 11

Compared to the first quarter of 2000, housing prices in Spain increased by 250% in the _____.

Accepted Answer

A) fourth quarter of 2003 
B) third quarter of 2007 
C) second quarter of 2009 
D) first quarter of 2011 
A) fourth quarter of 2003 
B) third quarter of 2007 
C) second quarter of 2009 
D) first quarter of 2011

Question 12

Had there been no coverage of the Irish and Spanish bonds by the larger banks, _____.

Accepted Answer

A) there would have been no deficit implosions in Ireland and Spain. 
B) there would have been more tax evasions by individuals in Ireland and Spain. 
C) there would have been more funds for Irish and Spanish banks to lend to their customers. 
D) there would have been no housing bubbles in Ireland and Spain. 
A) there would have been no deficit implosions in Ireland and Spain. 
B) there would have been more tax evasions by individuals in Ireland and Spain. 
C) there would have been more funds for Irish and Spanish banks to lend to their customers. 
D) there would have been no housing bubbles in Ireland and Spain.

Question 13

In which year did Ireland's deficit to GDP ratio fall below -30 percent?

Accepted Answer

A) 2008 
B) 2009 
C) 2010 
D) 2011 
A) 2008 
B) 2009 
C) 2010 
D) 2011

Question 14

Which of the following is a reason why the governments of the weaker economies of Europe have limited ability to engage in bank bailouts?

Accepted Answer

A) Their home currencies are volatile and vulnerable to depreciation. 
B) They do not have the ability to borrow the required amount of funds. 
C) They cannot reform their budgets to be able to receive assistance. 
D) They are prohibited to do so by their central banks. 
A) Their home currencies are volatile and vulnerable to depreciation. 
B) They do not have the ability to borrow the required amount of funds. 
C) They cannot reform their budgets to be able to receive assistance. 
D) They are prohibited to do so by their central banks.

Question 15

Which of the following articles of the Treaty on the functioning of the European Union prohibited bailouts of one country by the union or by any member state unless it was viewed as necessary?

Accepted Answer

A) Article 124 
B) Article 125 
C) Article 126 
D) Article 127 
A) Article 124 
B) Article 125 
C) Article 126 
D) Article 127

Question 16

During the period from 2001 to 2007, investors were indifferent between lending to a rich or a poor euro-member nation because

Accepted Answer

A) the short-term interest rate on government Treasury bonds was at all-time high across all European nations. 
B) the poorer member nations projected a growth rate that matched the growth rates of the rich member nations 
C) all European nations were experiencing booms and busts in tandem. 
D) interest rates on 10-year government debt were largely identical across Europe's largest governments during the period. 
A) the short-term interest rate on government Treasury bonds was at all-time high across all European nations. 
B) the poorer member nations projected a growth rate that matched the growth rates of the rich member nations 
C) all European nations were experiencing booms and busts in tandem. 
D) interest rates on 10-year government debt were largely identical across Europe's largest governments during the period.

Question 17

Article 123 of the Treaty on the functioning of the European Union stated that the

Accepted Answer

A) European Union would bailout any member country in distress. 
B) member countries had to maintain a deficit to GDP ratio of 4 percent. 
C) European Central Bank could not purchase member nation debt. 
D) member countries had to keep a fixed gold deposit with the European Central Bank. 
A) European Union would bailout any member country in distress. 
B) member countries had to maintain a deficit to GDP ratio of 4 percent. 
C) European Central Bank could not purchase member nation debt. 
D) member countries had to keep a fixed gold deposit with the European Central Bank.

Question 18

Weaker European countries could not engage in programs such as the troubled asset relief programs to pull themselves out of the recession because

Accepted Answer

A) they had planned to pull out of the European Union. 
B) they devaluated their home currencies. 
C) they faced prohibitive interest rates on borrowing. 
D) they are prohibited to do so by the European Central Bank. 
A) they had planned to pull out of the European Union. 
B) they devaluated their home currencies. 
C) they faced prohibitive interest rates on borrowing. 
D) they are prohibited to do so by the European Central Bank.

Question 19

In which of the following countries did unemployment rate fall between 2009 and 2011?

Accepted Answer

A) Spain 
B) Italy 
C) Germany 
D) Ireland 
A) Spain 
B) Italy 
C) Germany 
D) Ireland

Question 20

In which year was Ireland's debt to GDP ratio equal to Portugal's debt to GDP ratio at 100 percent?

Accepted Answer

A) 2008 
B) 2009 
C) 2010 
D) 2011 
A) 2008 
B) 2009 
C) 2010 
D) 2011

Exam 19: The European Debt Crisis

The threat of a Greek exit from the euro system

Which of the following organizations was the predecessor to the European Union?

In which year did long-term interest rates in Greece rise to an all-time high of close to 30%?

Which of the following European countries used fiscal policy to induce explosions in deficits to mitigate recession?

Which of the following would result if Greece decided to order all Greek banks to convert euro-denominated accounts to drachma-denominated accounts?

In which year did GDP growth in Greece fall below -6 percent?

Greece did not engage in expansionary monetary policy to pull out of recession because

_____ were the main sources of mortgage loans in Europe between 2000 and 2009?

Which of the following statements is true of austerity?

Which of the following reasons promoted lending to the poorer member countries in the European Union during 2001-2007?

Compared to the first quarter of 2000, housing prices in Spain increased by 250% in the _____.

Had there been no coverage of the Irish and Spanish bonds by the larger banks, _____.

In which year did Ireland's deficit to GDP ratio fall below -30 percent?

Which of the following is a reason why the governments of the weaker economies of Europe have limited ability to engage in bank bailouts?

Which of the following articles of the Treaty on the functioning of the European Union prohibited bailouts of one country by the union or by any member state unless it was viewed as necessary?

During the period from 2001 to 2007, investors were indifferent between lending to a rich or a poor euro-member nation because

Article 123 of the Treaty on the functioning of the European Union stated that the

Weaker European countries could not engage in programs such as the troubled asset relief programs to pull themselves out of the recession because

In which of the following countries did unemployment rate fall between 2009 and 2011?

In which year was Ireland's debt to GDP ratio equal to Portugal's debt to GDP ratio at 100 percent?

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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