Question 1

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 2

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.

Question 3

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.

Question 4

During the Great Recession, long-run aggregate supply decreased. This was caused by __________.

Accepted Answer

A)   an advance in technology
B)   a decrease in income and business tax rates
C)   an increase in immigration to the United States
D)   a breakdown in the loanable funds market
E)   an increase in the U.S. labor force

Question 5

During the Great Recession, the U.S. ________ curve shifted to the ________.

Accepted Answer

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

Question 6

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 7

If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that:

Accepted Answer

A)   the long run is more important than the short run.
B)   prices are flexible.
C)   more focus should be placed on the short run than the long run.
D)   savings is crucial to growth.
E)   the market tends toward stability and full employment.

Question 8

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

Accepted Answer

A)   the economy rapidly bounced back and resumed normal growth quickly.
B)   the economy never really declined much at all.
C)   the economy did not return to normal for at least one year.
D)   the economy increased rapidly following the beginning of the recession.
E)   the economy essentially collapsed and never recovered.

Question 9

When U.S. aggregate demand and long-run aggregate supply decreased during the Great Recession:

Accepted Answer

A)   unemployment decreased.
B)   real gross domestic product (GDP)  also decreased.
C)   real GDP increased.
D)   real GDP was unaffected.
E)   the price level decreased.

Question 10

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 11

When financial markets went into a crisis during the Great Recession, it caused long-run aggregate supply to decrease because:

Accepted Answer

A)   there was a decrease in the level of technology.
B)   there were new regulations limiting the amount of loans that could be made.
C)   the U.S. population and labor force declined abruptly.
D)   all across the country, infrastructure began to fail.
E)   profits in the financial industry increased.

Question 12

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 13

During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which:

Accepted Answer

A)   contributed to a very long and deep recession.
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)   prevented the United States from experiencing a decline in real gross domestic product (GDP) .

Question 14

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 15

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 16

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 trade

Question 17

When did the Great Recession begin and end? How many months did it last? When did the Great Depression begin and end? How many months did it last?

Accepted Answer

The Great Recession began in December 20...

Question 18

When the government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because:

Accepted Answer

A)   it caused the stock market to crash, which reduced household wealth.
B)   household disposable income decreased, causing consumer spending to decrease.
C)   it caused high levels of inflation, which reduced the real value of household income.
D)   the money supply increased rapidly, causing interest rates to decrease.
E)   barriers to international trade decreased at the same time.

Question 19

When the U.S. aggregate demand curve shifted to the left during the Great Depression:

Accepted Answer

A)   tax rates decreased.
B)   real gross domestic product (GDP)  increased.
C)   the price level increased.
D)   the money supply increased.
E)   real GDP decreased.

Question 20

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

Accepted Answer

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

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

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

Correct Answer
verified

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

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 had _________ when compared to the average recession.

Correct Answer
verified

When financial markets went into a crisis during the Great Recession, it caused long-run aggregate supply to decrease because:

Correct Answer
verified

When the U.S. aggregate demand curve shifted to the left during the Great Depression:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

During the Great Recession, long-run aggregate supply decreased. This was caused by __________.

Correct Answer
verified

Correct Answer
verified

During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which:

Correct Answer
verified

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

Correct Answer
verified

When U.S. aggregate demand and long-run aggregate supply decreased during the Great Recession:

Correct Answer
verified

When the government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because:

Correct Answer
verified

During the Great Recession, the U.S. curve shifted to the .

Correct Answer
verified

When did the Great Recession begin and end? How many months did it last? When did the Great Depression begin and end? How many months did it last?

Correct Answer
verified
The Great Recession began in December 20...
View Answer

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

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

If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that:

Correct Answer
verified

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

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

Correct AnswerverifiedShow Answer

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

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 had _________ when compared to the average recession.

Correct AnswerverifiedShow Answer

When financial markets went into a crisis during the Great Recession, it caused long-run aggregate supply to decrease because:

Correct AnswerverifiedShow Answer

When the U.S. aggregate demand curve shifted to the left during the Great Depression:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

During the Great Recession, long-run aggregate supply decreased. This was caused by __________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When U.S. aggregate demand and long-run aggregate supply decreased during the Great Recession:

Correct AnswerverifiedShow Answer

When the government raised taxes at the beginning of the Great Depression, it caused aggregate demand to decrease because:

Correct AnswerverifiedShow Answer

During the Great Recession, the U.S. ________ curve shifted to the ________.

Correct AnswerverifiedShow Answer

When did the Great Recession begin and end? How many months did it last? When did the Great Depression begin and end? How many months did it last?

Correct AnswerverifiedThe Great Recession began in December 20...View AnswerShow Answer

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

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

If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that:

Correct AnswerverifiedShow Answer

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During the Great Recession, the U.S. curve shifted to the .

Correct Answer
verified

Correct Answer
verified
The Great Recession began in December 20...
View Answer

Correct Answer
verified

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

Correct Answer
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