Question 1

In comparison with other recessions, the Great Depression had

Accepted Answer

A)   much lower rates of unemployment.
B)   much higher levels of consumer sentiment.
C)   much higher international trade.
D)   much larger changes in stock prices.
E)   very small changes in real gross domestic product (GDP) .

Question 2

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 3

Imagine you are a Keynesian economist. Argue against the classical economists. List their primary beliefs and offer rebuttals from the Keynesian perspective.

Accepted Answer

Classical economists insist that the eco...

Question 4

In 1936, John Maynard Keynes published

Accepted Answer

A)   The Theory of the Wealth of Nations.
B)   The General Theory of Employment, Interest, and Money.
C)   The Theory of General Equilibrium.
D)   The Theory of Recession and Recovery.
E)   The General Theory of the Economy.

Question 5

Aside from what occurred with the Great Recession, how long does it typically take for the unemployment rate to return to normal levels following a post-World War II recession?

Accepted Answer

A)   2 to 4 months
B)   8 to 12 months
C)   4 to 8 months
D)   12 to 15 months
E)   24 to 30 months

Question 6

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 7

Classical economists believe that

Accepted Answer

A)   prices are sticky.
B)   the economy can adjust back to full employment on its own.
C)   the short run is more significant than the long run.
D)   aggregate demand is more significant than aggregate supply.
E)   the economy needs help in moving back to full employment.

Question 8

Summarize the general attitudes of classical economists and Keynesian economists with regard to price flexibility, the necessity of government intervention, and the time period of interest.

Accepted Answer

Classical economists insist that, in the...

Question 9

When describing how the economy works, classical economists claim that

Accepted Answer

A)   the economy needs help in moving back to full employment.
B)   savings is a drain on demand.
C)   aggregate demand is more significant than aggregate supply.
D)   savings is crucial to economic growth.
E)   prices are sticky.

Question 10

Compare and contrast Keynesian and classical views on savings and government spending on the macroeconomy.

Accepted Answer

Keynesians emphasize demand and the impo...

Question 11

Classical economists believe that prices are completely flexible, from which they conclude that the

Accepted Answer

A)   economy can become stuck at high levels of unemployment for long periods of time.
B)   economy is self-correcting in response to shocks.
C)   government will need to intervene in the economy frequently.
D)   best type of economy is centrally planned and run by the state.
E)   economy will experience wild swings in output and employment.

Question 12

Use the following graph to answer the next questions. The graph depicts an economy where aggregate demand and long-run aggregate supply (LRAS)  have decreased, with no change in short-run aggregate supply (SRAS) .
 
-During the Great Recession, real gross domestic product (GDP)  fell, yet the price level was largely unchanged, as depicted in the graph. Because of this, we know that_____during the recession.

Accepted Answer

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

Question 13

Assume that you are a Keynesian economist. You are asked what the government should do if the economy enters a recession. What would you say in response?

Accepted Answer

You would probably state that the govern...

Question 14

The Great Depression actually consisted of two separate recessions. The "second wave" of the Great Depression began in ______and lasted for ______months.

Accepted Answer

A)   August 1929; 44
B)   March 2001; 8
C)   December 2007; 18
D)   May 1937; 14
E)   December 1974;

Question 15

Explain the Great Depression and the Great Recession from the point of view of classical economics.

Accepted Answer

The Great Depression can be thought of a...

Question 16

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

Accepted Answer

A)   It is never necessary for the government to intervene in the economy.
B)   The primary determinant of economic growth is long-run aggregate supply.
C)   The long run is much more important than the short run.
D)   Savings is a drain on demand.
E)   Prices tend to be flexible.

Question 17

Use the following graph to answer the next four questions.
 
-In a typical aggregate supply and demand model, Line Y represents____ , while Line Z represents ____.

Accepted Answer

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

Question 18

During the Great Recession, ____caused long-run aggregate supply to decrease.

Accepted Answer

A)   an increase in international trade
B)   an advancement in technology
C)   financial market turmoil
D)   an increase in the U.S. labor force
E)   an increase in the money supply

Question 19

Keynesian economists believe that savings is a drain on demand because

Accepted Answer

A)   when a recession occurs, households tend to spend less, which only worsens the recession.
B)   prices are flexible and allow the economy to quickly return to full employment.
C)   the economy is stable and tends toward full employment.
D)   government intervention in the economy is unnecessary.
E)   the short run is more important than the long run, and economic policy only works in the short run.

Question 20

Keynesian economists stress the importance of aggregate_______ and generally believe that the economy to________ reach full-employment equilibrium on its own.

Accepted Answer

A)   supply and demand; needs help
B)   demand; needs help
C)   supply; needs help
D)   demand; does not need help
E)   supply; does not need help

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

Keynesian economists believe that savings is a drain on demand because

Correct Answer
verified

In comparison with other recessions, the Great Depression had

Correct Answer
verified

Explain the Great Depression and the Great Recession from the point of view of classical economics.

Correct Answer
verified
The Great Depression can be thought of a...
View Answer

When describing how the economy works, classical economists claim that

Correct Answer
verified

Aside from what occurred with the Great Recession, how long does it typically take for the unemployment rate to return to normal levels following a post-World War II recession?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Compare and contrast Keynesian and classical views on savings and government spending on the macroeconomy.

Correct Answer
verified
Keynesians emphasize demand and the impo...
View Answer

Use the following graph to answer the next four questions. -In a typical aggregate supply and demand model, Line Y represents , while Line Z represents .

Correct Answer
verified

Assume that you are a Keynesian economist. You are asked what the government should do if the economy enters a recession. What would you say in response?

Correct Answer
verified
You would probably state that the govern...
View Answer

Keynesian economists stress the importance of aggregate_ and generally believe that the economy to__ reach full-employment equilibrium on its own.

Correct Answer
verified

Classical economists believe that prices are completely flexible, from which they conclude that the

Correct Answer
verified

Correct Answer
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In 1936, John Maynard Keynes published

Correct Answer
verified

Summarize the general attitudes of classical economists and Keynesian economists with regard to price flexibility, the necessity of government intervention, and the time period of interest.

Correct Answer
verified
Classical economists insist that, in the...
View Answer

During the Great Recession, ____caused long-run aggregate supply to decrease.

Correct Answer
verified

The Great Depression actually consisted of two separate recessions. The "second wave" of the Great Depression began in and lasted for months.

Correct Answer
verified

Imagine you are a Keynesian economist. Argue against the classical economists. List their primary beliefs and offer rebuttals from the Keynesian perspective.

Correct Answer
verified
Classical economists insist that the eco...
View Answer

Classical economists believe that

Correct Answer
verified

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

Keynesian economists believe that savings is a drain on demand because

Correct AnswerverifiedShow Answer

In comparison with other recessions, the Great Depression had

Correct AnswerverifiedShow Answer

Explain the Great Depression and the Great Recession from the point of view of classical economics.

Correct AnswerverifiedThe Great Depression can be thought of a...View AnswerShow Answer

When describing how the economy works, classical economists claim that

Correct AnswerverifiedShow Answer

Aside from what occurred with the Great Recession, how long does it typically take for the unemployment rate to return to normal levels following a post-World War II recession?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Compare and contrast Keynesian and classical views on savings and government spending on the macroeconomy.

Correct AnswerverifiedKeynesians emphasize demand and the impo...View AnswerShow Answer

Use the following graph to answer the next four questions. -In a typical aggregate supply and demand model, Line Y represents____ , while Line Z represents ____.

Correct AnswerverifiedShow Answer

Assume that you are a Keynesian economist. You are asked what the government should do if the economy enters a recession. What would you say in response?

Correct AnswerverifiedYou would probably state that the govern...View AnswerShow Answer

Keynesian economists stress the importance of aggregate_______ and generally believe that the economy to________ reach full-employment equilibrium on its own.

Correct AnswerverifiedShow Answer

Classical economists believe that prices are completely flexible, from which they conclude that the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In 1936, John Maynard Keynes published

Correct AnswerverifiedShow Answer

Summarize the general attitudes of classical economists and Keynesian economists with regard to price flexibility, the necessity of government intervention, and the time period of interest.

Correct AnswerverifiedClassical economists insist that, in the...View AnswerShow Answer

During the Great Recession, ____caused long-run aggregate supply to decrease.

Correct AnswerverifiedShow Answer

The Great Depression actually consisted of two separate recessions. The "second wave" of the Great Depression began in ______and lasted for ______months.

Correct AnswerverifiedShow Answer

Imagine you are a Keynesian economist. Argue against the classical economists. List their primary beliefs and offer rebuttals from the Keynesian perspective.

Correct AnswerverifiedClassical economists insist that the eco...View AnswerShow Answer

Classical economists believe that

Correct AnswerverifiedShow Answer

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The Great Depression can be thought of a...
View Answer

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

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Keynesians emphasize demand and the impo...
View Answer

Use the following graph to answer the next four questions. -In a typical aggregate supply and demand model, Line Y represents , while Line Z represents .

Correct Answer
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Correct Answer
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You would probably state that the govern...
View Answer

Keynesian economists stress the importance of aggregate_ and generally believe that the economy to__ reach full-employment equilibrium on its own.

Correct Answer
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Correct Answer
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Classical economists insist that, in the...
View Answer

Correct Answer
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The Great Depression actually consisted of two separate recessions. The "second wave" of the Great Depression began in and lasted for months.

Correct Answer
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Correct Answer
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Classical economists insist that the eco...
View Answer

Correct Answer
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