Question 1

The Great Depression is commonly thought to have been the result of the stock market crash of 1929. Describe any other related factors that could have contributed to the Great Depression, with an eye toward aggregate supply and demand models.

Accepted Answer

The stock market crash led to a crisis i...

Question 2

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.

Question 3

Keynesian economists believe that government intervention in the economy is sometimes necessary to reach full employment. Explain why this is so.

Accepted Answer

Keynesian economists believe that prices...

Question 4

During the Great Recession, the unemployment rate climbed as high as ________ and remained around 8 percent ________ year(s)  after the recession began.

Accepted Answer

A)   15 percent; seven
B)   25 percent; eight
C)   10 percent; five
D)   20 percent; one
E)   35 percent; eight

Question 5

The Great Recession began when housing prices began to decline, followed by a decline in stock prices. A significant financial crisis then occurred in 2008. Using the aggregate demand and aggregate supply model, explain what effect these events had on the economy.

Accepted Answer

The decrease in housing prices and stock...

Question 6

During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

Accepted Answer

A)   an increase in tax rates and a decrease in stock prices
B)   a decrease in stock prices and a decrease in housing prices
C)   a decrease in housing prices and a decline in the level of technology
D)   a financial market crisis and an increase in gas prices
E)   a decrease in housing prices and a decrease in the money supply

Question 7

Use the following graph to answer the next questions.
 
-The difference between lines X1 and X2 represents an)

Accepted Answer

A)   aggregate demand change.
B)   aggregate demand bubble.
C)   long-run aggregate demand bubble.
D)   short-run aggregate supply change.
E)   long-run aggregate supply change.

Question 8

Classical economists believe that when aggregate demand changes, the economy remains at full employment because

Accepted Answer

A)   changes in aggregate demand do not affect prices.
B)   prices are very flexible.
C)   the government requires that the economy perform at full employment.
D)   international trade offsets any changes in demand.
E)   consumers and producers are not a part of aggregate demand.

Question 9

During the Great Depression, a major financial crisis followed the collapse of the stock market, which led to

Accepted Answer

A)   a decrease in tax rates and increase in the money supply.
B)   an increase in oil and gas prices.
C)   the failure of many banks.
D)   an increase in consumer sentiment and spending.
E)   a decrease in barriers to international trade.

Question 10

The Great Depression actually consisted of two recessions, the second of which began in ________
and ended in ________.

Accepted Answer

A)   October 1981; January 1984
B)   August 1929; March 1933
C)   March 2001; November 2001
D)   December 2007; June 2009
E)   May 1937; June 1938

Question 11

The Great Depression, when compared to other economic downturns in U.S. history,

Accepted Answer

A)   only affected a few regions of the United States.
B)   was about average in terms of severity.
C)   barely affected the economy at all.
D)   had far higher levels of consumer sentiment.
E)   was the longest economic downturn in the twentieth century.

Question 12

During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because

Accepted Answer

A)   housing prices increased dramatically.
B)   the U.S. government decreased taxes.
C)   there was a severe decline in stock prices.
D)   the U.S. government increased the supply of money.
E)   there was an increase in the U.S. population.

Question 13

When considering the magnitude of the Great Depression in comparison to other recessions, the Great Depression

Accepted Answer

A)   had far higher levels of international trade.
B)   was fairly typical, in terms of its length.
C)   was very short.
D)   was the most severe recession in U.S. history.
E)   only affected a small number of Americans.

Question 14

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

Accepted Answer

A)   The government should encourage savings as a means of promoting economic growth.
B)   The government should never intervene in the economy.
C)   The government should intervene in the economy to promote full employment.
D)   The government should intervene in the economy only when aggregate supply changes.
E)   The government should focus on long-run aggregate supply, not aggregate demand.

Question 15

During the Great Recession, real gross domestic product GDP) decreased and unemployment increased, yet the price level did not change much at all. Using the aggregate demand and aggregate supply model, explain what caused this.

Accepted Answer

Both aggregate demand and long-run aggre...

Question 16

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.

Question 17

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.

Question 18

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

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)   A stock market crash led to a decrease in expected income and tight monetary policy. Higher tax rates and a banking crisis then drove the economy into a depression.
E)   The stock market collapsed following the end of a bubble in technology stock prices, which caused a decrease in investment spending and a recession.

Question 19

The Great Depression actually consisted of two separate recessions. The “first wave” of the Great
Depression first began in ________ and initially lasted for ________ months.

Accepted Answer

A)   May 1937; 14
B)   August 1929; 44
C)   August 1945; 12
D)   July 1991; 18
E)   August 1972; 7

Question 20

Use the following graph to answer the next  questions. The graph depicts an economy where aggregate demand has decreased. Note that long-run aggregate supply remains changed.
 
-The graph shows a decrease in the price level due to a decrease in aggregate demand. Real gross domestic product GDP) , however, does not change. If this were an accurate description of how an economy responds during a recession, which of the following would be an appropriate government response to a decrease in aggregate demand?

Accepted Answer

A)   The government should make an effort to control prices and limit inflation.
B)   The government should attempt to stimulate short-run aggregate supply.
C)   The government should take active steps to promote full employment.
D)   The government should let the economy adjust to full employment on its own.
E)   The government should restrict international trade and immigration.

Exam 14: The Great Recession, the Great Depression, and Great Macroeconomic Debates

Classical economists believe that when aggregate demand changes, the economy remains at full employment because

Correct Answer
verified

Use the following graph to answer the next questions. -The difference between lines X1 and X2 represents an)

Correct Answer
verified

The Great Depression is commonly thought to have been the result of the stock market crash of 1929. Describe any other related factors that could have contributed to the Great Depression, with an eye toward aggregate supply and demand models.

Correct Answer
verified
The stock market crash led to a crisis i...
View Answer

During the Great Recession, the unemployment rate climbed as high as and remained around 8 percent year(s) after the recession began.

Correct Answer
verified

When considering the magnitude of the Great Depression in comparison to other recessions, the Great Depression

Correct Answer
verified

The Great Depression, when compared to other economic downturns in U.S. history,

Correct Answer
verified

The Great Recession began when housing prices began to decline, followed by a decline in stock prices. A significant financial crisis then occurred in 2008. Using the aggregate demand and aggregate supply model, explain what effect these events had on the economy.

Correct Answer
verified
The decrease in housing prices and stock...
View Answer

During the Great Depression, a major financial crisis followed the collapse of the stock market, which led to

Correct Answer
verified

Correct Answer
verified

During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because

Correct Answer
verified

The Great Depression actually consisted of two recessions, the second of which began in and ended in .

Correct Answer
verified

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

Correct Answer
verified

Keynesian economists believe that government intervention in the economy is sometimes necessary to reach full employment. Explain why this is so.

Correct Answer
verified
Keynesian economists believe that prices...
View Answer

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

Correct Answer
verified

During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

Correct Answer
verified

The Great Depression actually consisted of two separate recessions. The “first wave” of the Great Depression first began in and initially lasted for months.

Correct Answer
verified

Monetary policy is

Correct Answer
verified

During the Great Recession, real gross domestic product GDP) decreased and unemployment increased, yet the price level did not change much at all. Using the aggregate demand and aggregate supply model, explain what caused this.

Correct Answer
verified
Both aggregate demand and long-run aggre...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

Exam 14: The Great Recession, the Great Depression, and Great Macroeconomic Debates

Classical economists believe that when aggregate demand changes, the economy remains at full employment because

Correct AnswerverifiedShow Answer

Use the following graph to answer the next questions. -The difference between lines X1 and X2 represents an)

Correct AnswerverifiedShow Answer

The Great Depression is commonly thought to have been the result of the stock market crash of 1929. Describe any other related factors that could have contributed to the Great Depression, with an eye toward aggregate supply and demand models.

Correct AnswerverifiedThe stock market crash led to a crisis i...View AnswerShow Answer

During the Great Recession, the unemployment rate climbed as high as ________ and remained around 8 percent ________ year(s) after the recession began.

Correct AnswerverifiedShow Answer

When considering the magnitude of the Great Depression in comparison to other recessions, the Great Depression

Correct AnswerverifiedShow Answer

The Great Depression, when compared to other economic downturns in U.S. history,

Correct AnswerverifiedShow Answer

The Great Recession began when housing prices began to decline, followed by a decline in stock prices. A significant financial crisis then occurred in 2008. Using the aggregate demand and aggregate supply model, explain what effect these events had on the economy.

Correct AnswerverifiedThe decrease in housing prices and stock...View AnswerShow Answer

During the Great Depression, a major financial crisis followed the collapse of the stock market, which led to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because

Correct AnswerverifiedShow Answer

The Great Depression actually consisted of two recessions, the second of which began in ________ and ended in ________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Keynesian economists believe that government intervention in the economy is sometimes necessary to reach full employment. Explain why this is so.

Correct AnswerverifiedKeynesian economists believe that prices...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

Correct AnswerverifiedShow Answer

The Great Depression actually consisted of two separate recessions. The “first wave” of the Great Depression first began in ________ and initially lasted for ________ months.

Correct AnswerverifiedShow Answer

Monetary policy is

Correct AnswerverifiedShow Answer

During the Great Recession, real gross domestic product GDP) decreased and unemployment increased, yet the price level did not change much at all. Using the aggregate demand and aggregate supply model, explain what caused this.

Correct AnswerverifiedBoth aggregate demand and long-run aggre...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
The stock market crash led to a crisis i...
View Answer

During the Great Recession, the unemployment rate climbed as high as and remained around 8 percent year(s) after the recession began.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The decrease in housing prices and stock...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The Great Depression actually consisted of two recessions, the second of which began in and ended in .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Keynesian economists believe that prices...
View Answer

Correct Answer
verified

Correct Answer
verified

The Great Depression actually consisted of two separate recessions. The “first wave” of the Great Depression first began in and initially lasted for months.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Both aggregate demand and long-run aggre...
View Answer

Correct Answer
verified

Correct Answer
verified