Question 1

Of the ten recessions that have occurred in the United States between 1946 and 2002,
A) 4 of 10 have happened under Republican administrations.
B) 5 of 10 have happened under Republican administrations.
C) 6 of 10 have happened under Republican administrations.
D) 7 of 10 have happened under Republican administrations.
E) 8 of 10 have happened under Republican administrations.

Accepted Answer

E

Question 2

Which of the following isnot a part of aggregate demand? Consumption and investment expenditures made by A) government. B) domestic customers. C) foreign consumers. D) domestic producers. E) foreign producers.

Accepted Answer

Foreign producers' expenditures are not part of a country's aggregate demand, as aggregate demand includes consumption, investment, government spending, and net exports (exports minus imports) within the domestic economy.

Question 3

Between 2003 and 2010,the dollar has depreciated against America's principal trading partners
A) between 5 and 10 percent.
B) between 15 and 20 percent.
C) between 25 and 30 percent.
D) between 30 and 40 percent.
E) between 40 and 50 percent.

Accepted Answer

D

Question 4

Which of the following reasons is a weakness of the explanation of exchange-rate policy changes according to the electoral approach? A) It tells us little about exchange-rate policy at other times other than election periods. B) Different political parties pursue distinct macroeconomic objectives. C) Right wing parties are typically less concerned about unemployment and more concerned about inflation. D) It does not assume that all governments value monetary autonomy more than exchange-rate stability. E) Exchange rate policy is determined by the group that has the greatest influence regardless of elections.

Accepted Answer

The weakness of the electoral approach is that it only explains exchange-rate policy changes during election periods and does not provide insight into policy changes at other times.

Question 5

Between 1995 and 2001,the dollar rose in value against America's largest trading partners by
A) 10%.
B) 15%.
C) 20%.
D) 25%.
E) 30%.

Accepted Answer

According to the given time period between 1995 and 2001, the dollar rose in value against America's largest trading partners by approximately 30%. Therefore, the correct answer is E.

Question 6

Investment expenditures typically account for about __________ of total national expenditures.
A) 10%
B) 20%
C) 30%
D) 40%
E) 50%

Accepted Answer

Investment expenditures refer to expenditures on capital goods such as machinery, buildings, and equipment that are used to produce goods and services in the future. These expenditures are typically made by businesses and governments. According to national accounts data, investment expenditures typically account for about 20% of total national expenditures, which includes expenditures on consumption, investment, government purchases, and net exports.

Question 7

In the early 1920s,British unemployment rose to about
A) 10%.
B) 14%.
C) 16%.
D) 20%.
E) 22%.

Accepted Answer

In the early 1920s, British unemployment rose to about 20%. This was a result of the post-World War I economic downturn, which had a significant impact on the country's economy. The high unemployment rate led to social and political unrest and motivated the government to adopt various policies to address the issue.

Question 8

The "Unholy Trinity" framework deals with three government policy goals:
A) floating exchange rate, domestic autonomy of monetary policy, and capital mobility.
B) fixed exchange rate, domestic autonomy of monetary policy, and labor mobility.
C) fixed exchange rate, domestic autonomy of monetary policy, and capital mobility.
D) fixed exchange rate, domestic autonomy of fiscal policy, and capital mobility.
E) floating exchange rate, domestic autonomy of fiscal policy, and labor mobility.

Accepted Answer

The "Unholy Trinity" framework, also known as the impossible trinity or the trilemma, states that a country cannot simultaneously have a fixed exchange rate, domestic autonomy of monetary policy, and capital mobility. The only option that aligns with this framework is choice C, which includes a fixed exchange rate, domestic autonomy of monetary policy, and capital mobility.

Question 9

The chief weakness of the partisan model is that
A) it is not a good predictor of leftist governments but it is of rightist governments.
B) it is not a good predictor of rightist governments but it is of leftist governments.
C) partisan macroeconomic policies are differentiated too sharply.
D) it is not a good predictor of U.S. governments but it is of European governments.
E) it is not a good predictor of European governments but it is of U.S. governments.

Accepted Answer

The chief weakness of the partisan model is that it assumes partisan macroeconomic policies are differentiated too sharply, which is not always the case. In reality, political parties may have more similar policies than the model suggests, leading to less predictive power.

Question 10

According to Keynes,economies can get stuck at high levels of unemployment because of
A) government budget deficits.
B) uncertainty of investment decisions.
C) adverse parliamentary regulations.
D) exchange rate instability.
E) cash hoarding.

Accepted Answer

Uncertainty of investment decisions can lead to a lack of investment and, consequently, high levels of unemployment.

Question 11

In Great Britain until 1884,only
A) 3.3% of the population could vote.
B) 6.3% of the population could vote.
C) 9.3% of the population could vote.
D) 12.3% of the population could vote.
E) 15.3% of the population could vote.

Accepted Answer

Until the Reform Act of 1832, only a small number of wealthy male property owners could vote. The Reform Acts of 1867 and 1884 expanded the right to vote to more people, but it wasn't until the latter act that a significant portion of the population gained suffrage. Therefore, until 1884, only a small fraction of the British population had the right to vote, and 3.3% is the most accurate answer among the choices given.

Question 12

Governmental attitudes toward economic management after WW I changed because
A) electoral systems were more restrictive concerning minimum voting age after the war.
B) electoral systems were more restrictive concerning minimum income or property conditions after the war.
C) universal male suffrage had been adopted in all Western European countries by 1911.
D) universal female suffrage had been adopted in all Western European countries by 1931.
E) Interests of workers had been but excluded from the political process until after the war.

Accepted Answer

After World War I, there was a significant shift in governmental attitudes towards economic management, largely due to the increased political influence of workers. The war effort had necessitated the mobilization and employment of vast numbers of workers, including women and previously marginalized groups. This led to a greater recognition of their contributions and a push for more inclusive policies that considered the interests of the working class, which had been largely excluded or underrepresented in the political process before the war.

Question 13

The three society-based models of monetary and exchange rate politics are 
A) an institutional model,a partisan model,and a factor model.
B) an organizational model, a partisan model, and a sectoral model.
C) an institutional model, a neutral model, and a sectoral model.
D) an institutional model, a production model, and a sectoral model.
E) an institutional model, a partisan model, and a sectoral model.

Accepted Answer

The three society-based models of monetary and exchange rate politics are the institutional model, which examines the role of institutions in shaping policy; the partisan model, which focuses on political parties and their ideologies; and the sectoral model, which looks at how different economic sectors influence monetary and exchange rate policies. This is reflected in choice E.

Question 14

Which of the following statements is true?
A) When capital is mobile, imbalances arise slowly after a change in monetary policy.
B) When capital is immobile, imbalances arise rapidly after a change in monetary policy.
C) When capital is mobile, imbalances are usually pretty small.
D) When capital is immobile, imbalances are usually very large.
E) When capital is immobile, imbalances are usually pretty small.

Accepted Answer

The answer of Which of the following statements is true?
A)...

Question 15

Because Keynes believed that the cause of persistent high unemployment ultimately lay in adequate demand for goods,he proposed that governments use fiscal and monetary policies to
A) manage interest rates.
B) manage aggregate demand.
C) manage savings rates.
D) manage budget deficits.
E) manage imports.

Accepted Answer

Keynes believed that persistent high unemployment was a result of inadequate aggregate demand for goods. Therefore, he proposed that governments use fiscal and monetary policies to manage aggregate demand. Fiscal policies involve government spending and taxation, while monetary policies involve controlling the money supply and interest rates. By using these policies to boost aggregate demand, Keynes believed that governments could reduce unemployment and stimulate economic growth. Therefore, the best choice is B - manage aggregate demand.

Question 16

In constitutional democracies politicians must win approval of veto players to adjust macroeconomic policies to their benefit.Examples of veto players do not include
A) opposition political parties.
B) independent domestic government institutions.
C) sub-national units with influence over economic policy.
D) state governments in the United States.
E) foreign government institutions.

Accepted Answer

Foreign government institutions are not considered veto players in a constitutional democracy as they do not have direct influence or power over the policy-making process of the country. Veto players typically refer to domestic actors such as opposition parties, independent government institutions, and sub-national units who can block or shape the macroeconomic policies being proposed. State governments in the United States are sometimes considered veto players depending on their level of influence and power within the federal system.

Question 17

Governments in advanced industrial societies have consistently chosen domestic economic autonomy over exchange-rate stability only since the
A) 1860s.
B) 1880s.
C) 1900s.
D) 1920s.
E) 1940s.

Accepted Answer

Governments in advanced industrial societies have consistently chosen domestic economic autonomy over exchange-rate stability only since the 1920s. Prior to that, the gold standard and other fixed exchange rate systems were prevalent in the international economy, limiting countries' ability to pursue independent monetary and fiscal policies. It was only after the collapse of the gold standard in the wake of World War I that countries began to experiment with more flexible exchange rate arrangements and greater domestic policy autonomy.

Question 18

According to the electoral model,eighteen months prior to an election,politicians are more likely to adopt
A) policies that fight inflation.
B) policies that inhibit economic growth.
C) policies that try to lower unemployment.
D) policies that try to stabilize exchange rates.
E) policies that devalue the currency.

Accepted Answer

According to the electoral model, politicians are more likely to adopt policies that try to lower unemployment 18 months prior to an election. This is because unemployment is a top concern among voters, and politicians want to show that they are taking action to address it in order to win votes.

Question 19

Keynes' revolutionary theories and policy recommendations focused primarily on the problem of
A) employment.
B) inflation.
C) consumer prices.
D) exports.
E) fixed exchange rate systems.

Accepted Answer

Keynes' theories and policy recommendations, as outlined in his book "The General Theory of Employment, Interest and Money", were primarily focused on the problem of unemployment and the need for government intervention to stimulate demand during periods of economic downturn.

Question 20

The Philips curve is based on a tradeoff between
A) inflation and unemployment.
B) deflation and unemployment.
C) inflation and budget deficit.
D) unemployment and trade deficit.
E) inflation and imports.

Accepted Answer

The Philips curve is based on the tradeoff between inflation and unemployment. It suggests that as unemployment decreases, inflation increases and vice versa. This relationship is not necessarily perfect, and it can be influenced by other factors such as supply shocks and expectations.

Quiz 12: A Society-Centered Approach to Monetary and Exchange-Rate Policies

Of the ten recessions that have occurred in the United States between 1946 and 2002,

Which of the following isnot a part of aggregate demand? Consumption and investment expenditures made by

Between 2003 and 2010,the dollar has depreciated against America's principal trading partners

Which of the following reasons is a weakness of the explanation of exchange-rate policy changes according to the electoral approach?

Between 1995 and 2001,the dollar rose in value against America's largest trading partners by

Investment expenditures typically account for about __________ of total national expenditures.

In the early 1920s,British unemployment rose to about

The "Unholy Trinity" framework deals with three government policy goals:

The chief weakness of the partisan model is that

According to Keynes,economies can get stuck at high levels of unemployment because of

In Great Britain until 1884,only

Governmental attitudes toward economic management after WW I changed because

The three society-based models of monetary and exchange rate politics are

Which of the following statements is true?

Because Keynes believed that the cause of persistent high unemployment ultimately lay in adequate demand for goods,he proposed that governments use fiscal and monetary policies to

In constitutional democracies politicians must win approval of veto players to adjust macroeconomic policies to their benefit.Examples of veto players do not include

Governments in advanced industrial societies have consistently chosen domestic economic autonomy over exchange-rate stability only since the

According to the electoral model,eighteen months prior to an election,politicians are more likely to adopt

Keynes' revolutionary theories and policy recommendations focused primarily on the problem of

The Philips curve is based on a tradeoff between