Question 1

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

Accepted Answer

Line Y represents short-run aggregate supply, while Line Z represents long-run aggregate supply in a typical aggregate supply and demand model.

Question 2

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

Accepted Answer

The graph shows a decrease in aggregate demand (shift to the left of the AD curve) with a constant long-run (LRAS) and short-run (SRAS) aggregate supply. The point A indicates the initial equilibrium, and point B indicates the new equilibrium after the decrease in aggregate demand. The output (real GDP) decreases, while the price level also decreases or remains constant. This scenario is consistent with a recession or economic downturn, where there is a decrease in overall spending in the economy.

Question 3

Keynesian economists believe that the economy is unstable and tends toward cyclical unemployment because

Accepted Answer

Keynesian economists believe that prices are sticky, meaning they do not adjust quickly to changes in supply and demand. As a result, the economy can become stuck in a situation of high unemployment and low output, even when there are resources available to produce more. Keynesian economics holds that government intervention in the form of monetary and fiscal policy can be effective in correcting these market failures and restoring economic growth and employment.

Question 4

Use the following graph to answer the following questions.
 
-In the aggregate demand-aggregate supply model shown,if point A occurs chronologically before point B,which situation would the figure accurately represent?

Accepted Answer

Aggregate demand and long-run aggregate supply have decreased, with no change in price level.

Question 5

Keynesian economists believe that savings is a drain on demand because

Accepted Answer

Keynesian economics emphasizes the importance of aggregate demand in driving the economy, and savings is seen as reducing that demand in the short run. During a recession, households may be more likely to save their money instead of spending it, which can exacerbate the downturn by reducing demand even further. Therefore, Keynesian economists believe that policies to increase demand, such as government spending or tax cuts, can help to stimulate economic activity and reduce unemployment.

Question 6

Use the following graph to answer the following questions.
 
-With regard to the Great Depression,the movement from point A to point B demonstrates what?

Accepted Answer

The movement from point A to point B on the graph shows a decrease in real gross domestic product (GDP) coupled with deflation. This corresponds with the economic conditions of the Great Depression, where deflation was widespread, and real GDP decreased significantly.

Question 7

Keynesian economists believe that government intervention in the economy is necessary because

Accepted Answer

Keynesian economists believe that prices are sticky in the short run, meaning they do not adjust quickly to changes in supply and demand. This can lead to unemployment and underutilization of resources. Therefore, government intervention through fiscal and monetary policy is necessary to stimulate aggregate demand and move the economy towards full employment.

Question 8

Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because

Accepted Answer

Keynesian economists believe that government intervention in the form of fiscal policy (such as increased government spending or tax cuts) can stimulate aggregate demand and promote full employment, even if it leads to short-term deficits. They argue that in the short run, prices are sticky and do not adjust quickly enough to changes in supply and demand, leading to economic inefficiencies and unemployment. Therefore, they advocate for policies that focus on increasing aggregate demand in the short run.

Question 9

Monetary policy is

Accepted Answer

Monetary policy refers to the actions taken by central banks or monetary authorities to manage the money supply and interest rates in the economy with the aim of achieving specific macroeconomic goals, such as low inflation, stable prices, and full employment. This is typically done by adjusting the money supply through buying and selling government securities, setting interest rates, and controlling bank reserve requirements. Option A is incorrect as laws passed since the Great Depression cover a variety of areas beyond monetary policy. Option B is incorrect as corporations do not enact policy to control prices and output at the macroeconomic level. Option D is incorrect as it refers to fiscal policy, which involves government spending and taxation. Option E is incorrect as it refers to labor regulations, which are a separate issue from monetary policy.

Question 10

Aside from what occurred with the Great Recession,what is a typical unemployment rate for a post-World War II recession?

Accepted Answer

A typical unemployment rate for a post-World War II recession is around 7 percent, as this reflects the average rate during economic downturns in that period, excluding the more severe impact of the Great Recession.

Question 11

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

The answer of Aside from what occurred with the Great...

Question 12

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

Accepted Answer

The answer of Use the following graph to answer the...

Question 13

The graph below suggests a housing price ________ followed by a(n)________ in aggregate demand.

Accepted Answer

The graph shows a steep increase in housing prices followed by a sharp decrease, indicating a housing bubble. This bubble would have occurred because of an initial increase in aggregate demand, possibly due to easy access to credit, but eventually, the demand could not keep up with the supply causing a decline in housing prices.

Question 14

Classical economists stress the importance of aggregate ________ and generally believe that the economy ________ to reach full-employment equilibrium on its own.

Accepted Answer

Classical economists emphasize the importance of aggregate supply and believe that the economy is self-regulating and will reach full-employment equilibrium on its own without intervention.

Question 15

In contrast to a typical post-World War II recession,the unemployment rate five years after the start of the Great Recession was

Accepted Answer

Five years after the start of the Great Recession, the unemployment rate was approximately 8 percent, which was higher than typical post-World War II recessions.

Question 16

Use the following graph to answer the following questions.
 
-The difference between lines X1 and X2 represents a(n)

Accepted Answer

The answer of Use the following graph to answer the...

Question 17

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

Accepted Answer

The answer of Use the following graph to answer the...

Question 18

Use the following graph to answer the following questions.
 
-Lines Y1 and Y2 represent

Accepted Answer

The answer of Use the following graph to answer the...

Question 19

Macroeconomic policy is

Accepted Answer

The answer of Macroeconomic policy is
...

Question 20

Fiscal policy is

Accepted Answer

Fiscal policy refers to the use of government's budget tools such as government spending and taxes to influence the macroeconomy. Option A refers to the historical context of fiscal policy but doesn't fully explain what fiscal policy is. Option B refers to the actions of corporations and not the government. Option C is referring to monetary policy, which is different from fiscal policy. Option E refers to labor regulations, which is not directly related to fiscal policy.

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

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

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

Keynesian economists believe that the economy is unstable and tends toward cyclical unemployment because

Use the following graph to answer the following questions. -In the aggregate demand-aggregate supply model shown,if point A occurs chronologically before point B,which situation would the figure accurately represent?

Keynesian economists believe that savings is a drain on demand because

Use the following graph to answer the following questions. -With regard to the Great Depression,the movement from point A to point B demonstrates what?

Keynesian economists believe that government intervention in the economy is necessary because

Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because

Monetary policy is

Aside from what occurred with the Great Recession,what is a typical unemployment rate for a post-World War II recession?

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?

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

The graph below suggests a housing price followed by a(n) in aggregate demand.

Classical economists stress the importance of aggregate and generally believe that the economy to reach full-employment equilibrium on its own.

In contrast to a typical post-World War II recession,the unemployment rate five years after the start of the Great Recession was

Use the following graph to answer the following questions. -The difference between lines X1 and X2 represents a(n)

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

Use the following graph to answer the following questions. -Lines Y1 and Y2 represent

Macroeconomic policy is

Fiscal policy is

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

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

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

Keynesian economists believe that the economy is unstable and tends toward cyclical unemployment because

Use the following graph to answer the following questions. -In the aggregate demand-aggregate supply model shown,if point A occurs chronologically before point B,which situation would the figure accurately represent?

Keynesian economists believe that savings is a drain on demand because

Use the following graph to answer the following questions. -With regard to the Great Depression,the movement from point A to point B demonstrates what?

Keynesian economists believe that government intervention in the economy is necessary because

Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because

Monetary policy is

Aside from what occurred with the Great Recession,what is a typical unemployment rate for a post-World War II recession?

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?

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

The graph below suggests a housing price ________ followed by a(n) ________ in aggregate demand.

Classical economists stress the importance of aggregate ________ and generally believe that the economy ________ to reach full-employment equilibrium on its own.

In contrast to a typical post-World War II recession,the unemployment rate five years after the start of the Great Recession was

Use the following graph to answer the following questions. -The difference between lines X1 and X2 represents a(n)

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

Use the following graph to answer the following questions. -Lines Y1 and Y2 represent

Macroeconomic policy is

Fiscal policy is

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

The graph below suggests a housing price followed by a(n) in aggregate demand.

Classical economists stress the importance of aggregate and generally believe that the economy to reach full-employment equilibrium on its own.