Question 1

During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

Accepted Answer

The decline in U.S. household wealth during the Great Recession was largely due to a decrease in stock prices and housing prices, as these were major assets for many Americans. The decrease in housing prices was particularly significant, as it led to a drop in home equity and an increase in mortgage defaults. This decline in household wealth led to a decrease in consumer spending and overall aggregate demand, contributing to the severity of the recession.

Question 2

When compared to other recessions, the Great Depression:

Accepted Answer

The Great Depression had much larger decreases in real gross domestic product (GDP) than other recessions.

Question 3

When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because:

Accepted Answer

When housing prices declined during the Great Recession, many households lost significant amounts of wealth as a result of lower home values. This caused a decline in consumer spending, which in turn caused aggregate demand to decrease.

Question 4

In comparison with other recessions, the Great Depression:

Accepted Answer

The Great Depression had much larger changes in stock prices compared to other recessions.

Question 5

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

Accepted Answer

Both the Great Depression and the Great Recession were characterized by significant stress in financial markets. In the Great Depression, this was primarily due to the failure of many banks and the collapse of the stock market. In the Great Recession, it was due to the subprime mortgage crisis and the failure of many financial institutions.

Question 6

When stock prices declined during the Great Recession, it caused aggregate demand to decrease because:

Accepted Answer

When stock prices declined during the Great Recession, household wealth decreased as many individuals held their savings in stocks or other financial assets. This decrease in wealth led to a decline in consumer spending, which caused a decrease in aggregate demand.

Question 7

The Great Depression ended in:

Accepted Answer

The Great Depression officially ended in June 1938, marked by an increase in production and a decrease in unemployment rates. None of the other options are correct as they either precede the start of the Great Depression (August 1929) or are unrelated time periods.

Question 8

The Great Depression actually consisted of two recessions, the first of which began in _________ and ended in _________.

Accepted Answer

The first recession of the Great Depression began in August 1929 with the stock market crash and lasted until March 1933 when President Roosevelt implemented the New Deal to stimulate the economy. The second recession occurred in 1937-1938 due to a combination of factors including a decrease in government spending and tightening monetary policy.

Question 9

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

Accepted Answer

The stock market crash of October 1929, also known as Black Tuesday, is widely considered the beginning of the Great Depression in the United States. This event led to a decrease in consumer spending, which ultimately had a negative impact on the economy, leading to high unemployment rates and an overall decline in GDP.

Question 10

The Great Depression actually consisted of two recessions, the second of which began in _________ and ended in _________.

Accepted Answer

The second recession of the Great Depression began in May 1937 and ended in June 1938. This period is known as the "Roosevelt Recession" and was caused partially by the government's attempt to reduce the deficit and balance the budget after years of deficit spending. The result was a decrease in government spending, which caused a decrease in demand and a subsequent increase in unemployment.

Question 11

Which of the following best summarizes the main causes of the Great Depression?

Accepted Answer

The stock market crash of 1929 led to a decrease in expected income and a subsequent decrease in investment spending. The Federal Reserve then tightened monetary policy, leading to a banking crisis and further decrease in investment and consumption spending. Higher tax rates also decreased disposable income and further reduced spending. These factors combined led to the deep and prolonged economic downturn known as the Great Depression.

Question 12

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 decrease in expected income, such as from job loss or wage cuts, can lead consumers to feel less confident about their finances and future prospects, resulting in a decrease in consumer sentiment and spending. Increases in household wealth or falling gasoline prices may have the opposite effect and boost consumer sentiment and spending, while a decrease in the money supply or an increase in tax rates may also lead to a decrease in consumer spending, but not necessarily through a decline in consumer sentiment.

Question 13

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

Accepted Answer

The answer of One of the reasons why the Great...

Question 14

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

Accepted Answer

The decrease in long-run aggregate supply was caused by new regulations limiting the amount of loans that could be made due to the financial crisis. This limited the ability of firms to borrow and invest in new technologies and equipment, ultimately leading to a decrease in productivity and a decline in potential output.

Question 15

The back-to-back recessions that began in 1929 and ended in 1938 are collectively known as:

Accepted Answer

The Great Depression was a severe worldwide economic downturn that lasted from 1929 to 1939. It began with the stock market crash of October 1929 and was marked by a decline in consumer spending and investment, as well as a rise in unemployment and bank failures. The term "back-to-back recessions" refers to the fact that there were two separate downturns within this period, one from 1929-1933 and the other from 1937-1938.

Question 16

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

Accepted Answer

The "second wave" of the Great Depression began in May 1937 and lasted for 14 months. Option A refers to the start of the overall Great Depression, while options B and C refer to more recent recessions. Option E refers to a recession that occurred in the 1970s, long after the Great Depression had ended.

Question 17

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

Accepted Answer

The "first wave" of the Great Depression began in August 1929 and lasted for 44 months, ending in March 1933. The "second wave" of the Great Depression began in May 1937 and lasted for 13 months.

Question 18

One difference between the Great Recession and the Great Depression is that:

Accepted Answer

The answer of One difference between the Great Recession and...

Question 19

The Great Depression had _________ when compared to the average recession.

Accepted Answer

The Great Depression had many more bank failures when compared to the average recession. This contributed to the severity and length of the economic downturn.

Question 20

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

Accepted Answer

The U.S. government allowed the money supply to decline during the Great Depression, which led to a decrease in consumer spending and investment, exacerbating the economic downturn.

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

During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. Which pair of factors contributed to this decline in wealth?

When compared to other recessions, the Great Depression:

When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because:

In comparison with other recessions, the Great Depression:

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

When stock prices declined during the Great Recession, it caused aggregate demand to decrease because:

The Great Depression ended in:

The Great Depression actually consisted of two recessions, the first of which began in _ and ended in _.

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

The Great Depression actually consisted of two recessions, the second of which began in _ and ended in _.

Which of the following best summarizes the main causes of the Great Depression?

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?

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

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

The back-to-back recessions that began in 1929 and ended in 1938 are collectively known as:

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

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

One difference between the Great Recession and the Great Depression is that:

The Great Depression had _________ when compared to the average recession.

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