Question 1

Why will persistently restrictive monetary policy often lead to low interest rates?

Accepted Answer

Persistently restrictive monetary policy can lead to low interest rates due to the expectation of deflation. When inflation is low or falling, central banks may keep interest rates low in order to stimulate spending and investment. This is because low interest rates make borrowing cheaper for consumers and businesses, which can encourage them to spend and invest more, helping to boost economic growth.

Question 2

As the U.S.recovers from the 2008-2009 recession,asset prices are not likely to rebound quickly

Accepted Answer

The mal-investment in the housing market will take time to correct, meaning there will not be a quick rebound in asset prices. This is because the housing market was a large contributor to the recession and its recovery will take time. The other options do not fully explain why asset prices are not likely to rebound quickly.

Question 3

In the mid-1990s,Canada was experiencing large budget deficits,high levels of government expenditures as a share of the economy,and double-digit unemployment rates.Canadian policy-makers responded to this situation by

Accepted Answer

Canadian policy-makers responded to the situation of large budget deficits, high levels of government expenditures, and double-digit unemployment rates by cutting government spending. This was aimed at reducing the budget deficit and improving the country's fiscal situation. This policy was combined with other measures such as debt reduction and structural reforms aimed at improving the long-term health of the economy. The focus on reducing government expenditures helped to restore confidence in the Canadian economy and paved the way for future growth and prosperity.

Question 4

Which of the following most accurately describes the correlation between the aging populations of the U.S.and Japan?

Accepted Answer

The statement "The U.S. is currently experiencing similar growth of the elderly population as a share of the total, such as Japan experienced during 1990-2010, though at a slower rate" accurately describes the correlation between the aging populations of the U.S. and Japan. Option A is incorrect as the lag period is not 20 years. Option B is incorrect as it only refers to the growth curve since 1990, ignoring the overall trend. Option D is not accurate as there is no evidence or projection to suggest that the U.S. elderly population will surpass that of Japan by 2020.

Question 5

Which of the following is true with regard to the use of monetary policy to combat a recession?

Accepted Answer

If monetary policy makers turn toward restriction too quickly or stay with the expansionary policy too long, it can throw the economy back into recession or generate future inflation. This highlights the delicate balance that must be maintained in using monetary policy to combat a recession.

Question 6

Based on Japan's experience during the 1990s,which of the following is most likely to slow the long-term growth of the U.S.?

Accepted Answer

Japan experienced a "lost decade" of economic growth during the 1990s, in part due to its aging population. As the U.S. population ages, it is likely to have a similar effect on long-term growth. Factors such as restrictive monetary policy or a balanced budget may have more immediate effects on the economy, but are less likely to have a significant impact on long-term growth. Stimulus packages designed to increase aggregate demand may help boost short-term growth, but their long-term effects are less clear.

Question 7

In response to high rates of unemployment and a large and growing debt as a share of the economy,in the latter half of the 1990s,Canada

Accepted Answer

In order to address high rates of unemployment and growing debt, Canada reduced government spending and shifted the federal budget toward a surplus in the latter half of the 1990s. This involved tough austerity measures and cuts to social programs, but ultimately led to a decrease in debt and a stronger economy.

Question 8

Which of the following is a major difference between the Japanese experience of the 1990s and the U.S.in 2008-2009?

Accepted Answer

The U.S. saving rate was significantly lower than Japan's during the 1990s, which affected the economic dynamics and recovery strategies in both countries.

Question 9

Which of the following is a similarity between the Japanese experience of the 1990s and the U.S.in 2008-2009?

Accepted Answer

The answer of Which of the following is a similarity...

Question 10

Which of the following responded to an economic downturn with a shift to a more expansionary monetary policy?

Accepted Answer

The U.S. responded to the recession of 2008-2009 with a shift to a more expansionary monetary policy, including lowering interest rates and implementing quantitative easing. Japan in the 1990s struggled with a prolonged period of deflation and opted for a more restrictive monetary policy, while the U.S. during the Great Depression initially followed a contractionary policy that worsened the economic situation. Therefore, A and B are incorrect answers.

Question 11

Based on Japan's experience during the 1990s,are fiscal stimulus packages effective in promoting a quick and sustainable recovery?

Accepted Answer

Japan's fiscal stimulus packages during the 1990s did not result in the desired effects of strong aggregate demand and output. In fact, the secondary effects of increased government debt and reduced private sector confidence may have actually hindered the country's recovery.

Question 12

During the Japanese downturn of the early 1990s and the U.S.recession of 2008-2009,both countries

Accepted Answer

Both Japan and the US increased government spending and ran large budget deficits as a share of the economy during their respective downturns. This was done in order to stimulate economic growth and mitigate the negative effects of the recessions.

Question 13

Workers in a labor force of a highly skilled country,like Japan or the United States,usually reach their productive peak

Accepted Answer

Workers in highly skilled countries reach their productive peak in their 40s and 50s when they have a balance of education and experience. It is during this period that they have likely gained a significant amount of experience in their field, but are still physically and mentally capable of performing at a high level. This is also when many workers are in leadership or management positions, where their experience and knowledge can be leveraged to train and mentor younger workers.

Question 14

Which of the following was true of Japan during the 1990s?

Accepted Answer

Japan implemented expansionary fiscal policies during the 1990s, including public works and stimulus packages, but these measures did not lead to a quick economic recovery due to structural issues and deflationary pressures.

Question 15

Between 1990 and 2010,the population age 65 years and older in Japan,

Accepted Answer

According to the information given, the population age 65 years and older in Japan almost doubled, expanding from 12 percent to approximately 23 percent between 1990 and 2010. Therefore, choice A is the correct answer.

Question 16

Which of the following most accurately describes Japan's fiscal and monetary policies during the 1990s?

Accepted Answer

During the 1990s, Japan pursued an expansionary fiscal policy with increased government spending and tax cuts designed to stimulate the economy, while the Bank of Japan pursued a restrictive monetary policy by raising interest rates and restricting the money supply to control inflation. This led to a contradiction between fiscal and monetary policies, which undermined their effectiveness in addressing Japan's economic problems. Thus, option D is the most accurate description of Japan's fiscal and monetary policies during the 1990s.

Question 17

As the share of a nation's population age 65 and older expands,

Accepted Answer

As the population ages, the productivity growth tends to slow down because older workers tend to retire, have less energy or less interest in working, and require more time off for health reasons. Additionally, this cohort may require more healthcare services, which may strain the healthcare system and increase healthcare expenses. Hence, options A, C, and D are incorrect.

Question 18

As the elderly population of a nation expands as a share of the total,

Accepted Answer

As the proportion of elderly citizens increases, there will be a decrease in the number of working individuals, leading to higher taxes on the remaining workforce to finance retirement programs for the elderly. The slowdown in the growth of productivity may occur due to a shortage of workers, and this can lead to overall economic growth slowing down. Therefore, option B is the correct choice. Option A and D are incorrect because an increase in the elderly population is likely to lead to higher government expenditures on health care and retirement programs, and government spending as a share of the economy may not necessarily fall. Option C is also incorrect because a decrease in the number of active workers may lead to a labor shortage and higher wage costs, which can negatively impact economic growth.

Question 19

One advantage that Japan held during the recession of the 1990s over the U.S.recession in 2008-2009,was in its

Accepted Answer

Japan had a higher rate of saving during the 1990s recession, which allowed for more financial stability and resilience during the economic downturn. The U.S. had a lower rate of saving during the 2008-2009 recession, which contributed to the severity and length of the recession.

Question 20

During the mid-1990s,the Canadian economy was characterized by

Accepted Answer

During the mid-1990s, Canada faced large budget deficits, high government expenditures, and a downgrade of its bonds, reflecting economic challenges.

Quiz 35: Lessons From Japan and Canada