Question 1

Which of the following policy statements would a classical economist tend to support?

Accepted Answer

A)   The government should be prepared to intervene when aggregate demand changes in any way.
B)   The government should only intervene in the economy when aggregate demand decreases.
C)   The government should allow the economy to adjust to changes in aggregate demand on its own, without interference.
D)   The government should frequently change taxes and spending levels to manipulate the economy.
E)   The government should only intervene in the economy when aggregate demand increases.F) A) and B)
G) B) and E)

Question 2

When stock prices declined during the Great Recession, it caused aggregate demand to decrease because

Accepted Answer

A)   households became more optimistic and increased consumer spending.
B)   the government raised taxes and decreased spending.
C)   firms' net worth decreased, leading to an increase in investment spending.
D)   household wealth decreased, leading to a decline in consumer spending.
E)   the government refused to allow the money supply to increase.F) B) and C)
G) A) and B)

Question 3

The Great Depression had_____ when compared to the average recession.

Accepted Answer

A)   many more bank failures
B)   very small decreases in real gross domestic product (GDP) 
C)   very low tax rates
D)   very stable stock prices
E)   very high international tradeF) C) and D)
G) A) and C)

Question 4

Use the following graph to answer the next questions. This graph depicts an economy where aggregate demand has decreased, with no change in either short-run aggregate supply (SRAS)  or long-run aggregate supply (LRAS) .
 
-The graph accurately summarizes what happened during the Great Depression, because during that time, the price level _____and real gross domestic product (GDP) _____ .

Accepted Answer

A)   decreased; decreased
B)   increased; decreased
C)   remained unchanged; remained unchanged
D)   decreased; increased
E)   remained unchanged; decreasedF) A) and E)
G) B) and E)

Question 5

One similarity between the Great Depression and the Great Recession is that in both cases

Accepted Answer

A)   stock prices remained largely unaffected.
B)   housing prices climbed rapidly.
C)   there was very high inflation.
D)   unemployment remained very low.
E)   there was noticeable stress in financial markets.F) B) and E)
G) A) and B)

Question 6

Use the image below to explain what happened to aggregate supply and demand during the Great Depression.

Accepted Answer

The Great Depression can be modeled as a...

Question 7

Which of the following best summarizes the main causes of the Great Recession?

Accepted Answer

A)   Oil-producing countries deliberately raised the price of petroleum, leading to inflation and a deep recession.
B)   The Federal Reserve raised short-term interest rates very high in an effort to decrease inflation, which also drove the economy into a recession.
C)   The end of overseas war efforts led to a deep decrease in federal spending, which reduced employment and caused a recession.
D)   The stock market collapsed following the end of a bubble in technology stock prices, which caused a decrease in investment spending and a recession.
E)   The collapse of housing prices led to decreased wealth and significant problems in financial markets, as well as a decrease in expected income and a stock market collapse.F) C) and E)
G) A) and B)

Question 8

The Great Depression ended in

Accepted Answer

A)   June 2009.
B)   May 1937.
C)   August 1929.
D)   June 1938.
E)   August 2004.F) None of the above
G) B) and E)

Question 9

Which of the following would have caused aggregate demand to decrease during the Great Depression?

Accepted Answer

A)   a decrease in tax rates
B)   an increase in international trade
C)   a decrease in the money supply
D)   an increase in the labor supply
E)   an increase in consumer sentimentF) A) and E)
G) C) and D)

Question 10

Monetary policy is

Accepted Answer

A)   the set of laws passed since the Great Depression to influence the macroeconomy.
B)   policy enacted by corporations to control prices and output in the macroeconomy.
C)   adjusting the money supply to influence the macroeconomy.
D)   the use of government's budget tools, government spending, and taxes to influence the macroeconomy.
E)   the government's use of labor regulations to influence the macroeconomy.F) C) and D)
G) A) and B)

Question 11

The Great Recession ended in

Accepted Answer

A)   June 2009.
B)   January 2009.
C)   March 1933.
D)   June 1938.
E)   June 2012.F) D) and E)
G) A) and E)

Question 12

The Great Recession is named as such because it differs from typical post-World War II recessions in significant ways. Describe these differences, and explain the causes of the differences using an aggregate supply and demand model.

Accepted Answer

The Great Recession saw real gross domes...

Question 13

When the government pursued a "tight money" policy during the Great Depression, it caused aggregate demand to decrease because it

Accepted Answer

A)   led to an increase in stock prices and household wealth.
B)   reduced consumer spending and investment spending.
C)   caused tax rates to decrease.
D)   led to very high rates of inflation, which eroded household spending.
E)   caused a rapid decline in exports to other countries.F) B) and C)
G) All of the above

Question 14

During the Great Recession, a(n)  _____caused aggregate demand to decrease.

Accepted Answer

A)   decrease in stock prices
B)   decrease in business tax rates
C)   increase in immigration to the United States
D)   increase in consumer sentiment
E)   decrease in income taxesF) C) and D)
G) A) and B)

Question 15

Keynesian economists believe that

Accepted Answer

A)   the market tends toward stability and full employment.
B)   the economy needs help in moving back to full employment.
C)   savings is crucial to growth.
D)   prices are flexible.
E)   the long run is more important than the short run.F) A) and E)
G) A) and B)

Question 16

During the Great Recession, aggregate demand______ and long-run aggregate supply______ .

Accepted Answer

A)   increased; increased
B)   decreased; decreased
C)   decreased; remained unchanged
D)   remained unchanged; decreased
E)   increased; decreasedF) None of the above
G) A) and D)

Question 17

A decrease in U.S. housing prices would tend to cause

Accepted Answer

A)   aggregate demand to decrease.
B)   long-run aggregate supply to increase.
C)   short-run aggregate supply to decrease.
D)   long-run aggregate supply to decrease.
E)   aggregate demand to increase.F) A) and B)
G) B) and D)

Question 18

During the Great Depression, there was a financial crisis and a stock market crash, both of which

Accepted Answer

A)   prevented the United States from experiencing a decline in real gross domestic product (GDP) .
B)   helped the U.S. economy perform better than the economies of other countries.
C)   kept unemployment from rising above the historical average.
D)   resulted in a very short and mild recession.
E)   contributed to a very long and deep depression.F) C) and E)
G) A) and D)

Question 19

The Great Recession was similar to other recessions since World War II in that

Accepted Answer

A)   the rate of unemployment increased and then decreased at a later time.
B)   the rate of inflation was extremely high.
C)   real gross domestic product GDP)  rapidly increased and then leveled off.
D)   the rate of economic growth was unchanged.
E)   the rate of unemployment decreased and then increased at a later time.F) A) and B)
G) C) and E)

Question 20

During the Great Depression, aggregate demand decreased. This would have been caused by an)

Accepted Answer

A)   increase in immigration to the United States.
B)   decrease in wealth.
C)   decrease in business tax rates.
D)   increase in the money supply.
E)   increase in consumer sentiment.F) B) and C)
G) B) and E)

Exam 14: Recessions, Expansions, and the Debate Over How to Manage Them

Correct Answer
verified

During the Great Depression, aggregate demand decreased. This would have been caused by an)

Correct Answer
verified

The Great Depression had_____ when compared to the average recession.

Correct Answer
verified

Which of the following best summarizes the main causes of the Great Recession?

Correct Answer
verified

The Great Recession was similar to other recessions since World War II in that

Correct Answer
verified

The Great Recession ended in

Correct Answer
verified

The Great Depression ended in

Correct Answer
verified

A decrease in U.S. housing prices would tend to cause

Correct Answer
verified

During the Great Recession, a(n) _____caused aggregate demand to decrease.

Correct Answer
verified

Which of the following would have caused aggregate demand to decrease during the Great Depression?

Correct Answer
verified

When the government pursued a "tight money" policy during the Great Depression, it caused aggregate demand to decrease because it

Correct Answer
verified

During the Great Depression, there was a financial crisis and a stock market crash, both of which

Correct Answer
verified

Use the image below to explain what happened to aggregate supply and demand during the Great Depression.

Correct Answer
verified
The Great Depression can be modeled as a...
View Answer

Keynesian economists believe that

Correct Answer
verified

When stock prices declined during the Great Recession, it caused aggregate demand to decrease because

Correct Answer
verified

During the Great Recession, aggregate demand and long-run aggregate supply .

Correct Answer
verified

Which of the following policy statements would a classical economist tend to support?

Correct Answer
verified

The Great Recession is named as such because it differs from typical post-World War II recessions in significant ways. Describe these differences, and explain the causes of the differences using an aggregate supply and demand model.

Correct Answer
verified
The Great Recession saw real gross domes...
View Answer

Monetary policy is

Correct Answer
verified

One similarity between the Great Depression and the Great Recession is that in both cases

Correct Answer
verified

Exam 14: Recessions, Expansions, and the Debate Over How to Manage Them

Correct AnswerverifiedShow Answer

During the Great Depression, aggregate demand decreased. This would have been caused by an)

Correct AnswerverifiedShow Answer

The Great Depression had_____ when compared to the average recession.

Correct AnswerverifiedShow Answer

Which of the following best summarizes the main causes of the Great Recession?

Correct AnswerverifiedShow Answer

The Great Recession was similar to other recessions since World War II in that

Correct AnswerverifiedShow Answer

The Great Recession ended in

Correct AnswerverifiedShow Answer

The Great Depression ended in

Correct AnswerverifiedShow Answer

A decrease in U.S. housing prices would tend to cause

Correct AnswerverifiedShow Answer

During the Great Recession, a(n) _____caused aggregate demand to decrease.

Correct AnswerverifiedShow Answer

Which of the following would have caused aggregate demand to decrease during the Great Depression?

Correct AnswerverifiedShow Answer

When the government pursued a "tight money" policy during the Great Depression, it caused aggregate demand to decrease because it

Correct AnswerverifiedShow Answer

During the Great Depression, there was a financial crisis and a stock market crash, both of which

Correct AnswerverifiedShow Answer

Use the image below to explain what happened to aggregate supply and demand during the Great Depression.

Correct AnswerverifiedThe Great Depression can be modeled as a...View AnswerShow Answer

Keynesian economists believe that

Correct AnswerverifiedShow Answer

When stock prices declined during the Great Recession, it caused aggregate demand to decrease because

Correct AnswerverifiedShow Answer

During the Great Recession, aggregate demand______ and long-run aggregate supply______ .

Correct AnswerverifiedShow Answer

Which of the following policy statements would a classical economist tend to support?

Correct AnswerverifiedShow Answer

The Great Recession is named as such because it differs from typical post-World War II recessions in significant ways. Describe these differences, and explain the causes of the differences using an aggregate supply and demand model.

Correct AnswerverifiedThe Great Recession saw real gross domes...View AnswerShow Answer

Monetary policy is

Correct AnswerverifiedShow Answer

One similarity between the Great Depression and the Great Recession is that in both cases

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
The Great Depression can be modeled as a...
View Answer

Correct Answer
verified

Correct Answer
verified

During the Great Recession, aggregate demand and long-run aggregate supply .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Great Recession saw real gross domes...
View Answer

Correct Answer
verified

Correct Answer
verified