Question 1

Keynes' great book offered the promise of ending depressions through
A) investors reacting to lower interest rates.
B) consumers taking over the ownership of factories.
C) government nationalizing key industries.
D) government influencing aggregate demand.

Accepted Answer

Keynes believed that government intervention could influence aggregate demand through fiscal and monetary policy, thereby stabilizing the economy and preventing depressions.

Question 2

Technically speaking,in what year did the "Great Recession" end?
A) 1933
B) 1935
C) 2007
D) 2009
E) It had not ended as of 2011.

Accepted Answer

The "Great Recession" officially ended in June 2009, according to the National Bureau of Economic Research.

Question 3

What was suggested by Keynes to move the economy out of a depressed state?
A) The invisible hand
B) The price mechanism
C) Monetary and fiscal policy
D) Zero government intervention

Accepted Answer

Keynes suggested the use of monetary and fiscal policy to move the economy out of a depressed state. This involved increasing government spending and reducing taxes to stimulate aggregate demand and encourage economic growth. It also involved adjusting interest rates and the money supply to control inflation and promote economic stability. This approach was focused on active government intervention in contrast to the laissez-faire approach of the invisible hand and price mechanism, which relied on market forces to regulate the economy.

Question 4

The most severe depression in the United States was the 30 percent decrease in real GDP that occurred between
A) 1899 and 1913.
B) 1929 and 1933.
C) 1959 and 1963.
D) 1979 and 1983.

Accepted Answer

The 30 percent decrease in real GDP refers to the Great Depression which lasted from 1929 to 1933. This was the most severe depression in the United States, with high unemployment rates and widespread economic hardship.

Question 5

The 1960s are remembered by most economists as a period of
A) very high rates of inflation.
B) very high rates of unemployment.
C) price controls and low inflation.
D) noninflationary growth.
E) all of the above.

Accepted Answer

The 1960s were characterized by noninflationary growth, with inflation rates remaining relatively low compared to previous decades. Unemployment was also low during this time period, and there were no significant price controls in place.

Question 6

The price controls on consumer goods during World War II led to
A) permanent surpluses.
B) stable long-term prices.
C) a burst of inflation when they were ended.
D) increased production of consumer goods to satisfy demand.

Accepted Answer

The price controls during World War II artificially kept prices low, but when they were ended, there was a burst of inflation as prices quickly rose to their natural levels. This inflationary effect was a common consequence of price controls during wartime.

Question 7

The human consequences of the Great Depression included
A) homeless families.
B) closed factories.
C) bankrupt farmers.
D) soup lines.
E) all of the above conditions.

Accepted Answer

All of the above conditions were consequences of the Great Depression. Homeless families were a result of unemployment and foreclosure. Closed factories contributed to the high unemployment rate. Bankrupt farmers were unable to afford their mortgages or maintain their farms. Soup lines were common as many people could not afford to buy food.

Question 8

The term "stagflation" was invented in the 1970s to describe an economy experiencing both
A) deflation and economic stagnation.
B) inflation and economic stagnation.
C) high inflation and high employment.
D) high inflation and high levels of economic growth.

Accepted Answer

Stagflation describes an economy experiencing both inflation and economic stagnation, which is characterized by high inflation rates, slow economic growth, and high unemployment rates. This term was coined in the 1970s to describe the economic conditions of that decade.

Question 9

Which of the following would be counted in the U.S.GDP for 2011?
A) a Ford Fiesta made in Mexico
B) the $5,000 an investor used to purchase stock in Home Depot
C) Ford buying tires from Goodyear for new Ford Mustangs
D) none of the above

Accepted Answer

The answer of Which of the following would be counted...

Question 10

In contrast to the typical Republican Party laissez-faire policies,President Richard Nixon in 1971 introduced
A) mandatory drug testing of cabinet officers.
B) monetary targets for the Federal Reserve Board.
C) wage and price controls.
D) mandatory gold purchases by the U.S. Treasury.

Accepted Answer

President Richard Nixon introduced wage and price controls in 1971, which was in contrast to the typical Republican Party laissez-faire policies. This policy was aimed at combating inflation and ensuring price stability, and it gave the government the power to set limits on wages and prices in various sectors of the economy.

Question 11

The significantly high rates of inflation in the 1970s occurred,in part,
A) because of increased petroleum prices.
B) due to high unemployment.
C) despite falling gasoline prices.
D) due to restrictive monetary policies.

Accepted Answer

The increased petroleum prices in the 1970s, particularly the oil embargo by OPEC, contributed significantly to the high rates of inflation.

Question 12

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an
A) inward shift of the aggregate demand curve.
B) outward shift of the aggregate supply curve.
C) inward shift of the aggregate supply curve.
D) outward shift of the aggregate demand curve.

Accepted Answer

The simultaneous increase in both inflation and unemployment suggests that there was a decrease in aggregate supply, shifting the AS curve inward. This could have been caused by factors such as an increase in oil prices, which would increase production costs and reduce the willingness of firms to produce, leading to a decrease in output and an increase in prices. An inward shift of the AD curve would result in a decrease in output and an increase in unemployment, but would also lead to a decrease in inflation, which is not consistent with the observed patterns during this recession.

Question 13

The Great Depression ended in the United States when
A) the New Deal reforms were initiated by President Roosevelt.
B) deficit spending ended in 1937.
C) the United States returned to the gold standard in 1940.
D) the United States began to mobilize for war in the early 1940s.
E) the German economy suffered hyperinflation in the 1920s.

Accepted Answer

The Great Depression ended in the United States when the country began to mobilize for war in the early 1940s. The massive spending associated with wartime production pulled the country out of the depression and into economic prosperity.

Question 14

Stagflation can be defined as a combination of ____.
A) economic migration and inflation
B) economic aggregation and deflation
C) economic stagnation and inflation
D) economic aggregation and inflation

Accepted Answer

Stagflation is a combination of two economic phenomena: stagnation or slow economic growth and inflation or rising prices. Therefore, the correct answer is C, which defines stagflation as a combination of economic stagnation and inflation. A is incorrect because economic migration refers to the movement of people from one place to another and is not related to stagflation. B is incorrect because economic aggregation is not a commonly used economic term, and deflation is the opposite of inflation, so it cannot be part of stagflation. D is incorrect because economic aggregation is not a commonly used economic term, and while inflation is one component of stagflation, it is not enough to fully define the phenomenon.

Question 15

The period of 1973 to 1980 can best be described as a time of
A) deflation.
B) reflation.
C) unflation.
D) stagflation.
E) disflation.

Accepted Answer

This period was characterized by a combination of high inflation and stagnant economic growth, known as stagflation.

Question 16

The movements of real GDP and inflation during the 1973-1975 recession can be best explained by a
A) rightward shift of the aggregate demand curve.
B) leftward shift of the aggregate demand curve.
C) rightward shift of the aggregate supply curve.
D) leftward shift of the aggregate supply curve.

Accepted Answer

During the 1973-1975 recession, there was a leftward shift of the aggregate supply curve, as there were supply shocks caused by higher oil prices and production issues. This led to stagflation, where there was a decrease in real GDP and an increase in inflation.

Question 17

The successes of the 1960s were ascribed to the effects of
A) classical policies from the 1800s.
B) classical policies from the 1930s.
C) classical policies from the 1950s.
D) Keynesian policies from the 1930s.
E) Keynesian policies from the 1950s.

Accepted Answer

The successes of the 1960s were largely attributed to Keynesian economic policies, which were developed in the 1930s by economist John Maynard Keynes. These policies emphasized the importance of government intervention in the economy to manage demand and avoid large economic downturns.

Question 18

Usually,increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence,during World War II,of
A) full employment.
B) government ownership of factories.
C) full production.
D) wage and price controls.
E) high levels of patriotism.

Accepted Answer

During World War II, the US government implemented wage and price controls to prevent inflationary pressures from occurring. This was not the case during the Vietnam War, leading to higher inflation rates. Despite full employment and high levels of patriotism during World War II, it was the implementation of wage and price controls that prevented inflation from occurring.

Question 19

The stagflation in the United States during the 1974-1975 period can be attributed to
A) increases in real GDP due to high levels of defense spending.
B) tight monetary and fiscal policies of the Nixon-Ford administrations.
C) rapid increases in petroleum prices, poor harvests, and the removal of wage and price controls.
D) budget deficits by the federal government and increasing trade deficits by the United States.

Accepted Answer

The rapid increases in petroleum prices, poor harvests, and the removal of wage and price controls all contributed to the stagflation in the United States during the 1974-1975 period. This led to high inflation rates and high unemployment rates, a combination that was unusual at the time.

Question 20

The international organization most responsible for rising prices during the 1970s was
A) the WTO.
B) OPEC.
C) the CIA.
D) the World Bank.
E) the Trilateral Commission.

Accepted Answer

The Organization of Petroleum Exporting Countries (OPEC) was responsible for the rise in oil prices during the 1970s, as they had significant control over the global oil supply.

Quiz 5: An Introduction to Macroeconomics

Keynes' great book offered the promise of ending depressions through

Technically speaking,in what year did the "Great Recession" end?

What was suggested by Keynes to move the economy out of a depressed state?

The most severe depression in the United States was the 30 percent decrease in real GDP that occurred between

The 1960s are remembered by most economists as a period of

The price controls on consumer goods during World War II led to

The human consequences of the Great Depression included

The term "stagflation" was invented in the 1970s to describe an economy experiencing both

Which of the following would be counted in the U.S.GDP for 2011?

In contrast to the typical Republican Party laissez-faire policies,President Richard Nixon in 1971 introduced

The significantly high rates of inflation in the 1970s occurred,in part,

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

The Great Depression ended in the United States when

Stagflation can be defined as a combination of ____.

The period of 1973 to 1980 can best be described as a time of

The movements of real GDP and inflation during the 1973-1975 recession can be best explained by a

The successes of the 1960s were ascribed to the effects of

Usually,increased government spending for war increases inflationary pressures.The principal reason that inflation occurred during the Vietnam War and not during World War II was the existence,during World War II,of

The stagflation in the United States during the 1974-1975 period can be attributed to

The international organization most responsible for rising prices during the 1970s was