Question 1

The U.S.experience during the 1980s and 1990s illustrates that

Accepted Answer

The U.S. experience during the 1980s and 1990s showed that a monetary policy that keeps the inflation rate low and steady can help promote economic stability. This was demonstrated by the successful efforts of the Federal Reserve in controlling inflation during this period. The other choices are not supported by the U.S. experience during the 1980s and 1990s.

Question 2

Which of the following was an important source of economic stability during the two decades following the recovery from the 1982 recession?

Accepted Answer

The stability during the two decades following the recovery from the 1982 recession was largely due to monetary policy that kept the inflation rate low and relatively steady. This enabled businesses to plan for the future with greater certainty, leading to steady economic growth. The other choices (A, B, and D) do not accurately describe the economic policies and conditions during this period.

Question 3

Which of the following reduced the effectiveness of the Fed's low interest rate policy during the aftermath of the 2008-2009 recession?

Accepted Answer

All three factors mentioned in options A, B, and C contributed in reducing the effectiveness of the Fed's low-interest-rate policy. A heavy household indebtedness meant that low-interest-rate policy did not translate into higher spending or investment because households were already overburdened by debt. The reduction in earnings from savings accounts meant that individuals and households were less willing to spend and more willing to save, thereby reducing the impact of low-interest-rate policy. Finally, the fear of inflation fueled by the Fed's expansionary monetary policy also made households and businesses more cautious and less willing to spend or invest, again limiting the effectiveness of low-interest-rates as a policy tool.

Question 4

The 25 years prior to the crisis of 2008-2009 were

Accepted Answer

The answer of The 25 years prior to the crisis...

Question 5

Economists who believe that policy errors are the source of economic instability argue that the crisis of 2008 was primarily the result of

Accepted Answer

Economists who believe that policy errors are the source of economic instability, argue that the crisis of 2008 was primarily the result of housing regulations that undermined sound lending practices and Fed policies that generated the housing boom and bust.

Question 6

Compared to the 1910-1960 period,during the past 50 years the severity of macroeconomic fluctuations has

Accepted Answer

Over the past 50 years, there have been fewer and less severe recessions and inflation has been more stable compared to the period from 1910 to 1960. This suggests that the severity of macroeconomic fluctuations has decreased.

Question 7

Between 1983 and 2007,the U.S.economy was in recession approximately

Accepted Answer

Between 1983 and 2007, the U.S. economy experienced recessions in 1990-1991 and 2001, which collectively account for about 6% of the time during this period.

Question 8

Compared to the severe recession of 1981-1982,the growth of real GDP during the first two years of recovery from the 2008-2009 recession was

Accepted Answer

The growth of real GDP during the first two years of recovery from the 2008-2009 recession was slower compared to the severe recession of 1981-1982. Additionally, the unemployment rate fell by a smaller amount after the more recent recession.

Question 9

During the recession of 2008-2009,the length of time qualified workers were permitted to draw unemployment benefits was increased from 26 to up to 99 weeks.Economic theory indicates that this extension would

Accepted Answer

Economic theory suggests that increasing the duration of unemployment benefits reduces the opportunity cost of job search, as workers are able to collect payments for a longer period even though they are not employed. This may lead to longer spells of unemployment, as workers may be less motivated to quickly find a new job.

Question 10

During the last century,the percent of time the U.S.economy has been in recession has

Accepted Answer

According to data from the National Bureau of Economic Research, the percent of time the U.S. economy has been in recession has actually fallen over the last century. During the first half of the 20th century, there were more frequent and longer recessions, but since the 1980s, the economy has experienced longer periods of expansion with fewer and shorter recessions.

Question 11

In response to the recession of 2008-2009,the fiscal policy of the federal government was

Accepted Answer

The fiscal policy of the federal government was indeed highly expansionary in response to the 2008-2009 recession, with measures such as the American Recovery and Reinvestment Act of 2009. However, despite these efforts, the unemployment rate remained high in the subsequent years of 2010 and 2011, indicating that the expansionary fiscal policy was not enough to completely alleviate the effects of the recession.

Question 12

Compared with the recovery from the recession of 1981-82,the recovery from the recession of 2008-09 was characterized by

Accepted Answer

The answer of Compared with the recovery from the recession...

Question 13

Which of the following contributed to the weak recovery from the 2008-2009 recession?

Accepted Answer

The temporary nature of tax rebates and spending increases created uncertainty and had only a weak impact on aggregate demand. This weakened the recovery from the recession. Additionally, choices A, B, and D do not accurately reflect factors that contributed to the weak recovery. The Fed actually followed an expansionary monetary policy to stimulate the economy, government spending was increased by a significant amount, and budget deficits were large due to government efforts to stimulate the economy.

Question 14

During and following the recession of 2008-2009,private investment was

Accepted Answer

During and following the recession of 2008-2009, private investment was weak. This will tend to reduce the future productivity of workers as there will be less investment in new technologies, equipment, and training, which are essential for increasing productivity.

Question 15

The policy response to the recession of 2008-2009 provided an experiment on the potency of Keynesian fiscal policy.In what respect was this true?

Accepted Answer

The policy response to the recession of 2008-2009 involved a significant increase in government spending and budget deficits, in line with the Keynesian model's recommendation of using fiscal policy tools to stimulate the economy during a recession. The increase in government spending aimed to boost aggregate demand and stimulate economic activity. Therefore, (B) is the best choice as it accurately reflects the policy response and its alignment with Keynesian fiscal policy. The other options (A, C, and D) are incorrect since they do not reflect the policy response nor the Keynesian fiscal policy model.

Question 16

Compared to the 1910-1960 period,economic fluctuations during the past 50 years have been less severe.Most economists believe that this increased stability is primarily the result of

Accepted Answer

Most economists believe that the increased stability in economic fluctuations over the past 50 years is primarily due to more stable monetary policy. Central banks have become better at managing the money supply and interest rates, which has helped to stabilize inflation, reduce volatility in financial markets, and promote more consistent economic growth.

Question 17

Which of the following contributed to the weak recovery from the 2008-2009 recession?

Accepted Answer

Constant policy changes created uncertainty for businesses and investors, which led to hesitation in making new investments and hiring new employees. This ultimately slowed down economic growth and contributed to the weak recovery.

Question 18

Which of the following occurred during and following the 2008-2009 recession?

Accepted Answer

During and following the 2008-2009 recession, unemployment benefits were extended from their normal 26 weeks to up to 99 weeks, the Federal Reserve more than doubled the size of the monetary base, and the federal budget deficit expanded to approximately 10 percent of GDP. Therefore, all of the above are true.

Question 19

The two most severe recessions of the post-World War II era occurred in 1981-1982 and 2008-2009.The policy responses to the two recessions were

Accepted Answer

The policy responses to the two recessions were dramatically different. During the 1981-1982 recession, tax rates were cut and monetary policy was restrictive to combat inflation, while during the 2008-2009 recession, government spending was increased sharply and monetary policy was highly expansionary to stimulate demand.

Question 20

Which of the following contributed the most to the economic stability and strong growth of real GDP during the 1980s and 1990s?

Accepted Answer

Federal Reserve policies that kept the inflation rate low and relatively stable contributed the most to the economic stability and strong growth of real GDP during the 1980s and 1990s. This allowed for sustainable economic growth without the negative effects of high inflation.

Quiz 15: Stabilization Policy, output, and Employment

The U.S.experience during the 1980s and 1990s illustrates that

Which of the following was an important source of economic stability during the two decades following the recovery from the 1982 recession?

Which of the following reduced the effectiveness of the Fed's low interest rate policy during the aftermath of the 2008-2009 recession?

The 25 years prior to the crisis of 2008-2009 were

Economists who believe that policy errors are the source of economic instability argue that the crisis of 2008 was primarily the result of

Compared to the 1910-1960 period,during the past 50 years the severity of macroeconomic fluctuations has

Between 1983 and 2007,the U.S.economy was in recession approximately

Compared to the severe recession of 1981-1982,the growth of real GDP during the first two years of recovery from the 2008-2009 recession was

During the recession of 2008-2009,the length of time qualified workers were permitted to draw unemployment benefits was increased from 26 to up to 99 weeks.Economic theory indicates that this extension would

During the last century,the percent of time the U.S.economy has been in recession has

In response to the recession of 2008-2009,the fiscal policy of the federal government was

Compared with the recovery from the recession of 1981-82,the recovery from the recession of 2008-09 was characterized by

Which of the following contributed to the weak recovery from the 2008-2009 recession?

During and following the recession of 2008-2009,private investment was

The policy response to the recession of 2008-2009 provided an experiment on the potency of Keynesian fiscal policy.In what respect was this true?

Compared to the 1910-1960 period,economic fluctuations during the past 50 years have been less severe.Most economists believe that this increased stability is primarily the result of

Which of the following contributed to the weak recovery from the 2008-2009 recession?

Which of the following occurred during and following the 2008-2009 recession?

The two most severe recessions of the post-World War II era occurred in 1981-1982 and 2008-2009.The policy responses to the two recessions were

Which of the following contributed the most to the economic stability and strong growth of real GDP during the 1980s and 1990s?