Question 1

One similarity between the Great Recession and the Great Depression is that,in both episodes:

Accepted Answer

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%.

Question 2

Keynesian economists believe that prices are sticky and do not adjust quickly,from which they concluded that:

Accepted Answer

A)   the long run deserves more focus than the short run.
B)   savings is a crucial component of economic growth.
C)   the most important determinant of economic growth is long-run aggregate supply.
D)   government intervention is sometimes necessary to promote full employment.
E)   government intervention is never necessary to promote full employment.

Question 3

When held up against other economic downturns,the Great Depression:

Accepted Answer

A)   had very high levels of consumer sentiment.
B)   had stable stock prices.
C)   had high rates of deflation.
D)   had very high levels of international trade.
E)   had very small changes in real gross domestic product (GDP) .

Question 4

If a Keynesian economist were asked to make a statement about the relationship between the government and the economy,what might she say?

Accepted Answer

A)   "Government intervention is the only solution for economic problems."
B)   "It is never a good idea for the government to intervene in the economy."
C)   "The government's only role is to provide defense and protect property rights."
D)   "The government should be primarily concerned with public safety and health."
E)   "Government intervention in the economy is sometimes necessary."

Question 5

A stock market crash in is generally viewed as the beginning of the Great Depression.

Accepted Answer

A)   December 2007
B)   March 1933
C)   June 2009
D)   October 1929
E)   April 1945

Question 6

During the Great Recession,the unemployment rate climbed as high as _________ and remained around 8% _________ months after the recession began.

Accepted Answer

A)   15%; 75
B)   25%; 8
C)   10%; 60
D)   20%; 12
E)   35%; 80

Question 7

During the Great Recession,consumer sentiment in the United States declined,leading to a decrease in consumer spending.Which of the following factors caused this decrease in consumer sentiment?

Accepted Answer

A)   a decrease in expected income
B)   an increase in household wealth
C)   a decrease in the money supply
D)   an increase in tax rates
E)   falling gasoline prices

Question 8

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

Accepted Answer

A)   August 1929; 44 months
B)   March 2001; 8 months
C)   December 2007; 18 months
D)   May 1937; 14 months
E)   December 1974; 16 months

Question 9

According to classical economists,changes in aggregate demand have little effect on the overall economy,and therefore:

Accepted Answer

A)   the government will need to stimulate aggregate demand.
B)   long-run aggregate supply is the primary source of economic growth.
C)   prices are quite rigid and inflexible.
D)   unemployment will tend to persist over time.
E)   long-run aggregate supply is irrelevant in determining growth.

Question 10

The Great Recession lasted from _________ to _________.

Accepted Answer

A)   August 1929; March 1933
B)   May 1937; June 1938
C)   March 2001; November 2001
D)   December 2007; June 2009
E)   July 1991; June 1992

Question 11

Based on the belief that prices are very flexible,classical economists conclude that:

Accepted Answer

A)   the economy can become stuck at high levels of unemployment for long periods of time.
B)   government intervention in the economy is unnecessary.
C)   the economy will experience wild swings in output and employment.
D)   the best type of economy is centrally planned and run by the state.
E)   government intervention in the economy is very necessary.

Question 12

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 13

In comparison with other recessions,the Great Depression:

Accepted Answer

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

Question 14

The Great Recession lasted longer and was deeper than the average recession,in part,because:

Accepted Answer

A)   oil-producing countries dramatically increased oil prices, causing very high inflation.
B)   there was a dramatic cut in military spending in the years leading up to the recession.
C)   the Federal Reserve refused to increase the money supply to stimulate aggregate demand.
D)   the government raised tax rates in an effort to balance the federal budget.
E)   there was a major financial crisis following the collapse of housing prices.

Question 15

Use the following graph to answer the next seven 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) .
 
-The decline in housing prices contributed to the Great Recession,as depicted in the graph,in that:

Accepted Answer

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

Question 16

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

Accepted Answer

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

Question 17

If a classical economist were asked which factor is most important to ensuring economic growth,how might he respond?

Accepted Answer

A)   "Encouraging savings is crucial."
B)   "Encouraging immigration into the economy must be a high priority."
C)   "Providing for a strong national defense is more important."
D)   "Government intervention in the economy is of primary importance."
E)   "Being tough on crime is crucial."

Question 18

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 19

List two factors that caused the Great Depression to occur and two factors that caused the Great Recession to occur.

Accepted Answer

The Great Depression was caused by a rap...

Question 20

When compared to other recessions,the Great Depression:

Accepted Answer

A)   had very high levels of immigration to the United States.
B)   had much larger decreases in real gross domestic product (GDP) .
C)   had very low unemployment.
D)   had very stable stock prices.
E)   had much higher levels of consumer sentiment.

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

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

Correct Answer
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Classical economists believe that:

Correct Answer
verified

The Great Recession lasted longer and was deeper than the average recession,in part,because:

Correct Answer
verified

List two factors that caused the Great Depression to occur and two factors that caused the Great Recession to occur.

Correct Answer
verified
The Great Depression was caused by a rap...
View Answer

The Great Recession lasted from _ to _.

Correct Answer
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When held up against other economic downturns,the Great Depression:

Correct Answer
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During the Great Recession,consumer sentiment in the United States declined,leading to a decrease in consumer spending.Which of the following factors caused this decrease in consumer sentiment?

Correct Answer
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Keynesian economists believe that prices are sticky and do not adjust quickly,from which they concluded that:

Correct Answer
verified

During the Great Recession,the unemployment rate climbed as high as _ and remained around 8% _ months after the recession began.

Correct Answer
verified

According to classical economists,changes in aggregate demand have little effect on the overall economy,and therefore:

Correct Answer
verified

A stock market crash in is generally viewed as the beginning of the Great Depression.

Correct Answer
verified

Correct Answer
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If a classical economist were asked which factor is most important to ensuring economic growth,how might he respond?

Correct Answer
verified

Based on the belief that prices are very flexible,classical economists conclude that:

Correct Answer
verified

If a Keynesian economist were asked to make a statement about the relationship between the government and the economy,what might she say?

Correct Answer
verified

In comparison with other recessions,the Great Depression:

Correct Answer
verified

One similarity between the Great Recession and the Great Depression is that,in both episodes:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

When compared to other recessions,the Great Depression:

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

Classical economists believe that:

Correct AnswerverifiedShow Answer

The Great Recession lasted longer and was deeper than the average recession,in part,because:

Correct AnswerverifiedShow Answer

List two factors that caused the Great Depression to occur and two factors that caused the Great Recession to occur.

Correct AnswerverifiedThe Great Depression was caused by a rap...View AnswerShow Answer

The Great Recession lasted from _________ to _________.

Correct AnswerverifiedShow Answer

When held up against other economic downturns,the Great Depression:

Correct AnswerverifiedShow Answer

During the Great Recession,consumer sentiment in the United States declined,leading to a decrease in consumer spending.Which of the following factors caused this decrease in consumer sentiment?

Correct AnswerverifiedShow Answer

Keynesian economists believe that prices are sticky and do not adjust quickly,from which they concluded that:

Correct AnswerverifiedShow Answer

During the Great Recession,the unemployment rate climbed as high as _________ and remained around 8% _________ months after the recession began.

Correct AnswerverifiedShow Answer

According to classical economists,changes in aggregate demand have little effect on the overall economy,and therefore:

Correct AnswerverifiedShow Answer

A stock market crash in is generally viewed as the beginning of the Great Depression.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a classical economist were asked which factor is most important to ensuring economic growth,how might he respond?

Correct AnswerverifiedShow Answer

Based on the belief that prices are very flexible,classical economists conclude that:

Correct AnswerverifiedShow Answer

If a Keynesian economist were asked to make a statement about the relationship between the government and the economy,what might she say?

Correct AnswerverifiedShow Answer

In comparison with other recessions,the Great Depression:

Correct AnswerverifiedShow Answer

One similarity between the Great Recession and the Great Depression is that,in both episodes:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When compared to other recessions,the Great Depression:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The Great Depression was caused by a rap...
View Answer

The Great Recession lasted from _ to _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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During the Great Recession,the unemployment rate climbed as high as _ and remained around 8% _ months after the recession began.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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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 _.

Correct Answer
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Correct Answer
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Correct Answer
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