Question 1

Explain what is meant by the impressive stability of the "peacetime" economy in the U.S.between 1945 and 1962.

Accepted Answer

The impressive stability of the "peacetime" economy in the U.S. between 1945 and 1962 refers to the period of economic growth and prosperity that followed the end of World War II. This era was characterized by low unemployment, steady economic expansion, and minimal inflation. The government implemented policies that supported economic stability, such as the Marshall Plan for Europe's reconstruction and the GI Bill for returning veterans, which provided education and housing benefits. Additionally, the U.S. experienced a surge in consumer spending as people purchased homes and consumer goods, leading to a booming economy. The government also invested in infrastructure, such as the construction of the interstate highway system, which further stimulated economic growth. This period of stability laid the foundation for the U.S. to emerge as a global economic superpower.

Question 2

How did the world try to establish a new sense of financial order after World War II (1941-45)? Why did the world choose to use the gold-backed U.S.dollar as reserves?

Accepted Answer

After World War II, the world sought to establish a new sense of financial order in order to prevent another global economic collapse. This led to the creation of the Bretton Woods system in 1944, which aimed to promote international economic stability and prevent competitive currency devaluations.

The world chose to use the gold-backed U.S. dollar as reserves for several reasons. Firstly, the United States emerged from the war as the world's strongest and most stable economy, making the U.S. dollar a reliable and widely accepted currency. Additionally, the U.S. held the largest gold reserves at the time, which further supported the stability of the dollar.

Using the gold-backed U.S. dollar as reserves also provided a fixed exchange rate system, where other countries pegged their currencies to the dollar. This helped to stabilize international trade and investment, as it provided a common and stable reference point for exchange rates.

Overall, the choice to use the gold-backed U.S. dollar as reserves was a practical and strategic decision to promote financial stability and prevent the economic turmoil that had occurred during the interwar period.

Question 3

Private investment spending escalated during the post-World War II era (1945-50).

Accepted Answer

A) True 
 B)False  True

Question 4

By fixing the mint price of gold among commercial nations under the Gold Standard,the exchange rate risk falls significantly,thus encouraging trade.

Accepted Answer

A) True 
 B)False

Question 5

Explain why the Employment Act of 1946 is not a "New Deal" device.

Accepted Answer

The Employment Act of 1946 is not consid

Question 6

Eisenhower's conservative policies were characterized by budget surpluses that produced further declines in price levels.

Accepted Answer

A) True 
 B)False

Question 7

Define the "natural" rate of unemployment,structural unemployment and frictional unemployment.What does "overfull-employment" produce? Why did economists change the natural rate of unemployment?

Accepted Answer

The "natural" rate of unemployment refer

Question 8

What is fiscal policy? Under the Eisenhower administration,why did the U.S.government experience budget deficits during recessions and surpluses during expansions?

Accepted Answer

Fiscal policy refers to the government's

Question 9

World trade and tariffs have been regulated by the International Trade Organization (ITO),General Agreement on Tariffs and Trade (GATT)and the World Trade Organization (WTO).Today,only ?the ITO still exists to address international trade issues and monitor the implementation of any trade agreements negotiated in the Uruguay Round of world trade talks.

Accepted Answer

A) True 
 B)False

Question 10

Expansionary fiscal policy includes an increase in government spending,a decrease in taxes or some combination of the two.

Accepted Answer

A) True 
 B)False

Question 11

Why is it important for the U.S.to maintain stable imports in a global economy?

Accepted Answer

Maintaining stable imports is crucial fo

Question 12

What did the 1958 Treaty of Rome establish?

Accepted Answer

A)  The European Payments Union 
B)  The European Economic Community 
C)  The European Coal and Steel Community 
D)  The Marshall Plan 
A)  The European Payments Union 
B)  The European Economic Community 
C)  The European Coal and Steel Community 
D)  The Marshall Plan

Question 13

Between 1945 and 1950,the U.S.price level rose by one-third.This increase was complemented by which of the following?

Accepted Answer

A)  An increase in nominal and real GDP 
B)  An increase in nominal GDP but a decrease in real GDP 
C)  An increase in real GDP but a decrease in nominal GDP 
D)  Stable nominal and real GDP 
A)  An increase in nominal and real GDP 
B)  An increase in nominal GDP but a decrease in real GDP 
C)  An increase in real GDP but a decrease in nominal GDP 
D)  Stable nominal and real GDP

Question 14

How can banks increase the amount of loanable funds available for private lending?

Accepted Answer

A)  By selling government securities to securities dealers and the Federal Reserve System 
B)  By buying government securities from securities dealers and the Federal Reserve System 
C)  By buying stocks, property and other assets to hold on behalf of the banks 
D)  By holding 100 percent of customers' deposits in bank vaults 
A)  By selling government securities to securities dealers and the Federal Reserve System 
B)  By buying government securities from securities dealers and the Federal Reserve System 
C)  By buying stocks, property and other assets to hold on behalf of the banks 
D)  By holding 100 percent of customers' deposits in bank vaults

Question 15

The Economic Act of 1946 allowed the federal government to use discretionary fiscal policy to pursue economic prosperity.

Accepted Answer

A) True 
 B)False

Question 16

What did the fiscal conservatives of the Eisenhower administration (1953-61)want?

Accepted Answer

A)  Balanced budgets and with manageable inflation 
B)  Inflation and budget surpluses 
C)  A balanced budget and high rates of interest 
D)  Laissez-faire economy 
A)  Balanced budgets and with manageable inflation 
B)  Inflation and budget surpluses 
C)  A balanced budget and high rates of interest 
D)  Laissez-faire economy

Question 17

After the depression of the 1930s and the interruption of World War II,in the post-war period?(1945-50)private investment

Accepted Answer

A)  fell back to the 1920s level. 
B)  rose to unprecedented levels. 
C)  collapsed in the 1948 downturn and then returned to the stagnation levels of the 1930s. 
D)  did none of the above. 
A)  fell back to the 1920s level. 
B)  rose to unprecedented levels. 
C)  collapsed in the 1948 downturn and then returned to the stagnation levels of the 1930s. 
D)  did none of the above.

Question 18

Why is international trade important to the U.S.economy? How does it contribute to economic growth in U.S.output and income? Which barriers to trade emerged during the Great Depression?and remained in place until the Bretton Woods System was established?

Accepted Answer

International trade is important to the

Question 19

In 1945-52,the records show that falling price levels stimulated increases in real Gross National Product (GNP).

Accepted Answer

A) True 
 B)False

Question 20

The International Monetary Fund,one of the Bretton Woods Institutions,

Accepted Answer

A)  was meant to provide short-term credit. 
B)  was meant to provide long-term credit. 
C)  was meant to provide both short- and long-term credit. 
D)  was not meant to provide credit. 
A)  was meant to provide short-term credit. 
B)  was meant to provide long-term credit. 
C)  was meant to provide both short- and long-term credit. 
D)  was not meant to provide credit.

Exam 27: Before the New Frontier: The Postwar Economy

Explain what is meant by the impressive stability of the "peacetime" economy in the U.S.between 1945 and 1962.

How did the world try to establish a new sense of financial order after World War II (1941-45)? Why did the world choose to use the gold-backed U.S.dollar as reserves?

Private investment spending escalated during the post-World War II era (1945-50).

By fixing the mint price of gold among commercial nations under the Gold Standard,the exchange rate risk falls significantly,thus encouraging trade.

Explain why the Employment Act of 1946 is not a "New Deal" device.

Eisenhower's conservative policies were characterized by budget surpluses that produced further declines in price levels.

Define the "natural" rate of unemployment,structural unemployment and frictional unemployment.What does "overfull-employment" produce? Why did economists change the natural rate of unemployment?

What is fiscal policy? Under the Eisenhower administration,why did the U.S.government experience budget deficits during recessions and surpluses during expansions?

Expansionary fiscal policy includes an increase in government spending,a decrease in taxes or some combination of the two.

Why is it important for the U.S.to maintain stable imports in a global economy?

What did the 1958 Treaty of Rome establish?

Between 1945 and 1950,the U.S.price level rose by one-third.This increase was complemented by which of the following?

How can banks increase the amount of loanable funds available for private lending?

The Economic Act of 1946 allowed the federal government to use discretionary fiscal policy to pursue economic prosperity.

What did the fiscal conservatives of the Eisenhower administration (1953-61)want?

After the depression of the 1930s and the interruption of World War II,in the post-war period?(1945-50)private investment

Why is international trade important to the U.S.economy? How does it contribute to economic growth in U.S.output and income? Which barriers to trade emerged during the Great Depression?and remained in place until the Bretton Woods System was established?

In 1945-52,the records show that falling price levels stimulated increases in real Gross National Product (GNP).

The International Monetary Fund,one of the Bretton Woods Institutions,

Overseas Empire

Colonial Development

America on the Eve of Revolution

Gaining Independence

Westward Expansion

Population and Labor Force

Law and the Rise of Classical American Capitalism

Transportation, Internal Improvements, and Urbanization

Agricultural Expansion: The Conflict of Two Systems on the Land

The Debate over Slavery

The Early Industrial Sector

The Financial System and the International Economy

Economic Effects of the Civil War

Railroads and Economic Development

Post-Civil War Agriculture

Population Growth and the Atlantic Migration

Industrialization, Entrepreneurship, and Urban Growth

Big Business and Government Intervention

Financial Developments 1863–1914

The Giant Economy and Its International Relations

Labor and the Law

The Command Economy Emerges: World War I

Normalcy”: 1919–1929

The Great Depression

The New Deal

The “Prosperity” of Wartime

Population, Health, and Labor

Postwar Industry and Agriculture

To the New Millennium and Beyond

Does Our Past Have a Future?

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