Exam 27: The Great Recession, the Great Depression, and Great Macroeconomic Debates

A) the economy is self-correcting and tends toward full employment.
B) savings is a crucial component of economic growth.
C) the long run deserves more focus than the short run.
D) the economy is not self-correcting and can become stuck below full employment.
E) government intervention is never necessary to promote full employment.

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A) a large number of bank failures
B) a decrease in tariffs on imports
C) a decrease in tax rates
D) an increase in the labor supply
E) an increase in international trade

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A) large numbers of banks failed.
B) there were significant problems in financial markets.
C) the U.S.government raised taxes.
D) the U.S.government allowed the money supply to decrease.
E) the unemployment rate exceeded 20 percent.

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A) caused real gross domestic product (GDP) and the price level to increase.
B) caused an increase in oil and gas prices,which led to inflation.
C) caused a decrease in household wealth and created a crisis in the loanable funds market.
D) caused an increase in household wealth and a crisis in the loanable funds market.
E) prevented unemployment from rising above historical averages.

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A) both aggregate demand and long-run aggregate supply increased
B) aggregate demand and long-run aggregate supply both decreased
C) aggregate demand decreased and long-run aggregate supply increased
D) aggregate demand decreased and short-run aggregate supply increased
E) long-run aggregate supply increased and short-run aggregate supply decreased

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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) an adjustment of the money supply to influence the macroeconomy.
D) the use of government's budget tools,government spending,and taxes to influence the macroeconomy.
E) all government acts meant to influence the direction of the macroeconomy.

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A) 12
B) 18
C) 32
D) 44
E) 56

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A) 5 percent.
B) 12 percent.
C) 7 percent.
D) 10 percent.
E) 8 percent.

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Your response would likely be that the g...

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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.

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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 trade

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A) long-run aggregate supply; increase
B) aggregate demand; decrease
C) short-run aggregate supply; increase
D) long-run aggregate supply; decrease
E) aggregate demand; increase

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A) Government intervention in the economy is unnecessary.
B) The short run deserves more attention than the long run.
C) The key determinant of economic growth is long-run aggregate supply.
D) Savings is a crucial component of economic growth.
E) The economy tends to be stable and at full employment.

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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 taxes

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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.

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A) unemployment was far higher during the Great Recession.
B) very few banks failed during the Great Depression,but many failed during the Great Recession.
C) the U.S.government reduced the money supply during the Great Recession but raised it during the Great Depression.
D) the U.S.government reduced taxes during the Great Recession but raised them during the Great Depression.
E) there was significant inflation during the Great Depression and not during the Great Recession.

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A) the government increased the money supply and reduced interest rates.
B) the government reduced tax rates and increased spending.
C) stock prices increased during the Great Depression.
D) there was a stock market crash at the beginning of the depression.
E) the government reduced barriers to trade.

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A) aggregate demand; right
B) short-run aggregate supply; right
C) long-run aggregate supply; left
D) long-run aggregate supply; right
E) production possibilities; right

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