Question 1

Macroeconomic 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)   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.F) B) and E)
G) B) and C)

Question 2

The Great Recession was different from other recessions since World War II in that

Accepted Answer

A)   real gross domestic product GDP)  initially declined and then recovered sometime later.
B)   the trade deficit was largely unaffected.
C)   the rate of unemployment increased and then decreased at a later time.
D)   the decline in real gross domestic product GDP)  was much larger and lasted longer.
E)   the economy did not return to normal for at least one year.F) None of the above
G) A) and D)

Question 3

An institutional breakdown in U.S. financial markets would tend to cause

Accepted Answer

A)   aggregate demand to increase.
B)   long-run aggregate supply to decrease.
C)   short-run aggregate supply to increase.
D)   long-run aggregate supply to increase.
E)   aggregate demand to decrease.F) A) and C)
G) A) and D)

Question 4

In regard to describing how the economy functions, Keynesian economists claim that

Accepted Answer

A)   more focus should be placed on the long run than the short run.
B)   prices are sticky.
C)   savings is crucial to growth.
D)   the market tends toward stability and full employment.
E)   the economy does not need help in moving back to full employment.F) A) and B)
G) C) and D)

Question 5

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; eightF) B) and C)
G) B) and D)

Question 6

As a result of several factors, aggregate demand decreased during the Great Depression. One factor was an)

Accepted Answer

A)   increase in consumer sentiment.
B)   increase in international trade.
C)   decrease in business tax rates.
D)   decrease in expected income.
E)   increase in the money supply.F) A) and B)
G) A) and C)

Question 7

When compared to other recessions, the Great Depression had

Accepted Answer

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

Question 8

Prior to the Great Depression, U.S. stock prices decreased dramatically. This would tend to cause

Accepted Answer

A)   aggregate demand to decrease.
B)   aggregate demand to increase.
C)   long-run aggregate supply to increase.
D)   short-run aggregate supply to increase.
E)   long-run aggregate supply to decrease.F) B) and C)
G) A) and C)

Question 9

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) .F) C) and D)
G) A) and E)

Question 10

A decline in U.S. wealth would tend to cause _____to_____ .

Accepted Answer

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; increaseF) C) and E)
G) A) and E)

Question 11

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) .
 
-The decline in housing prices contributed to the Great Recession, as depicted in the graph, in that it

Accepted Answer

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.F) C) and D)
G) D) and E)

Question 12

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.F) A) and B)
G) A) and C)

Question 13

One of the reasons why the Great Depression was so severe is that

Accepted Answer

A)   stock prices increased during the Great Depression.
B)   the U.S. government increased taxes.
C)   the U.S. government allowed the money supply to increase.
D)   the unemployment rate decreased.
E)   expected income increased.F) A) and D)
G) C) and D)

Question 14

One of the reasons why the Great Depression was so severe is that

Accepted Answer

A)   the U.S. government lowered taxes.
B)   stock prices increased during the Great Depression.
C)   expected income increased.
D)   the U.S. government allowed the money supply to decline.
E)   the U.S. government allowed the money supply to increase.F) D) and E)
G) B) and E)

Question 15

Use the following graph to answer the next four questions.
 
-If point B occurs chronologically before point A, then this graph could represent

Accepted Answer

A)   a decrease in aggregate demand with a decrease in long-run and short-run aggregate supply.
B)   an increase in aggregate demand with constant long-run and short-run aggregate supply.
C)   a decrease in aggregate demand with constant long-run and short-run aggregate supply.
D)   constant aggregate demand with a decline in long-run aggregate supply.
E)   constant aggregate demand with a decline in short-run aggregate supply.F) None of the above
G) A) and D)

Question 16

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) .
 
-As a result of aggregate demand and long-run aggregate supply decreasing, we can see that the price level _____and real gross domestic product (GDP) _____ .

Accepted Answer

A)   remained unchanged; decreased
B)   increased; decreased
C)   decreased; remained unchanged
D)   remained unchanged; increased
E)   increased; increasedF) C) and D)
G) B) and E)

Question 17

When considering the basic operations of the macroeconomy, Keynesian economists argue that

Accepted Answer

A)   the economy does not need help in moving back to full employment.
B)   prices are flexible.
C)   the market tends toward stability and full employment.
D)   savings is a drain on demand.
E)   the long run is more significant than the short run.F) None of the above
G) A) and D)

Question 18

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

Accepted Answer

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

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 gross domestic product GDP)  decreased.F) C) and D)
G) B) and C)

Question 20

Use the following graph to answer the next four questions.
 
-If point A occurs chronologically before point B, which situation would be depicted?

Accepted Answer

A)   an increase in aggregate demand and a decrease in long-run aggregate supply
B)   a decrease in aggregate demand and a decrease in long-run aggregate supply
C)   an increase in aggregate demand and an increase in long-run aggregate supply
D)   a decrease in aggregate demand and an increase in long-run aggregate supply
E)   a decrease in aggregate demand and a decrease in short-run aggregate supplyF) D) and E)
G) A) and D)

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

One of the reasons why the Great Depression was so severe is that

Correct Answer
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In regard to describing how the economy functions, Keynesian economists claim that

Correct Answer
verified

One of the reasons why the Great Depression was so severe is that

Correct Answer
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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

An institutional breakdown in U.S. financial markets would tend to cause

Correct Answer
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A decline in U.S. wealth would tend to cause _to_ .

Correct Answer
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Correct Answer
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When the U.S. aggregate demand curve shifted to the left during the Great Depression,

Correct Answer
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Use the following graph to answer the next four questions. -If point A occurs chronologically before point B, which situation would be depicted?

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

Correct Answer
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As a result of several factors, aggregate demand decreased during the Great Depression. One factor was an)

Correct Answer
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When considering the basic operations of the macroeconomy, Keynesian economists argue that

Correct Answer
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Macroeconomic policy is

Correct Answer
verified

Correct Answer
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When compared to other recessions, the Great Depression had

Correct Answer
verified

Use the following graph to answer the next four questions. -If point B occurs chronologically before point A, then this graph could represent

Correct Answer
verified

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

Correct Answer
verified

Prior to the Great Depression, U.S. stock prices decreased dramatically. This would tend to cause

Correct Answer
verified

The Great Recession was different from other recessions since World War II in that

Correct Answer
verified

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

Correct Answer
verified

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

One of the reasons why the Great Depression was so severe is that

Correct AnswerverifiedShow Answer

In regard to describing how the economy functions, Keynesian economists claim that

Correct AnswerverifiedShow Answer

One of the reasons why the Great Depression was so severe is that

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

An institutional breakdown in U.S. financial markets would tend to cause

Correct AnswerverifiedShow Answer

A decline in U.S. wealth would tend to cause _____to_____ .

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the following graph to answer the next four questions. -If point A occurs chronologically before point B, which situation would be depicted?

Correct AnswerverifiedShow 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

As a result of several factors, aggregate demand decreased during the Great Depression. One factor was an)

Correct AnswerverifiedShow Answer

When considering the basic operations of the macroeconomy, Keynesian economists argue that

Correct AnswerverifiedShow Answer

Macroeconomic policy is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When compared to other recessions, the Great Depression had

Correct AnswerverifiedShow Answer

Use the following graph to answer the next four questions. -If point B occurs chronologically before point A, then this graph could represent

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Prior to the Great Depression, U.S. stock prices decreased dramatically. This would tend to cause

Correct AnswerverifiedShow Answer

The Great Recession was different from other recessions since World War II in that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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A decline in U.S. wealth would tend to cause _to_ .

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

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