Question 1

The Economic Stabilization Act of 1970 gave private industry the right to establish wage and price controls,but President Nixon vetoed this power.

Accepted Answer

The Economic Stabilization Act of 1970 actually gave the President the power to establish wage and price controls, not private industry. Nixon did not veto this power, he actually used it to establish the famous wage and price controls in 1971.

Question 2

In the period 1960-95,

Accepted Answer

During this period, a shift occurred in labor-management relations towards more cooperative relationships. This was due, in part, to the rise of unionization and collective bargaining, as well as efforts from both labor and capital to increase productivity and competitiveness in the global marketplace. The result was the creation of accords such as the "team concept" and "quality circles" which emphasized cooperation and productivity. This period was known as the "Great Accords" era, which facilitated more peaceful and cooperative labor relations.

Question 3

Prices rose strongly during the Vietnam War (1964-1974),and only the adroit monetary and fiscal policy management of the Carter administration (1976-1980)managed to get inflation under control.

Accepted Answer

Prices did rise strongly during the Vietnam War, but the Carter administration was not in power during that time. The Carter administration is known for its struggles with inflation in the late 1970s, not for getting inflation under control during the Vietnam War.

Question 4

The hope of "Reaganomics"-that ending inflation will stimulate economic growth-is supported by the experience of 1945-49.

Accepted Answer

The statement is false. The hope of Reaganomics was that reducing taxes and regulations would stimulate economic growth, not just ending inflation. Additionally, the experience of 1945-49, which refers to the post-World War II period, saw a different set of economic policies and circumstances, such as the implementation of the Marshall Plan and the rebuilding of Europe, that cannot be directly compared to the Reagan era.

Question 5

In the period 1960-95,the cycles of upturns and downturns in the economy (booms and recessions)

Accepted Answer

While there were still cycles of upturns and downturns in the economy during this time period, they were not as severe as prior to World War II. This can be attributed to increased knowledge and understanding of how the economy operates, as well as improved government policies and interventions.

Question 6

Political and social desires to increase the "quality of life" in the U.S.led to an increase in the federal funding of public libraries,television and radio as well as increases and broadened uses of federal lands,waters and parks.

Accepted Answer

Political and social desires to increase the "quality of life" in the U.S. did lead to an increase in federal funding for public libraries, television and radio, and federal lands, waters, and parks.

Question 7

Like Franklin D.Roosevelt (1933-45),William J.Clinton's (1993-2001)deficit-reducing tax hikes pushed the economy into a recession.

Accepted Answer

(Only FDR's tax hikes resulted in a recession.)

Question 8

In the long run,holding all else constant,inflation requires a decrease in the money supply relative ?to the output of goods and services-not enough money chasing too many goods.

Accepted Answer

Inflation occurs when there is too much money chasing too few goods, not the other way around. Therefore, holding all else constant, inflation requires an increase in the money supply relative to the output of goods and services.

Question 9

William J.Clinton (1993-2001)was the first U.S.president since the Great Depression to increase taxes to try to reduce the federal budget deficit.

Accepted Answer

(FDR was the first.)

Question 10

The Cold War was of overriding importance during the period after World War II for all of the following reasons except

Accepted Answer

The Cold War indeed stimulated economic growth in various sectors and regions due to defense spending and technological advancements. However, the assertion that without this spending, the economy would have certainly lapsed back into a depression like that of the 1930s, is not accurate. This overlooks other factors that contributed to post-war economic stability and growth, such as the Marshall Plan, consumer spending increases, and broader industrial expansion beyond just defense-related industries.

Question 11

In the period 1960-95,the federal government

Accepted Answer

During the period of 1960-95, the federal government played a much larger role in the economy than prior to World War II. This was mainly due to the implementation of new programs and policies such as Medicare, Medicaid, and the Great Society. The federal government also played a significant role in the regulation of the economy, especially in areas such as banking, environmental protection, and consumer protection. Additionally, the government provided funding for scientific research and development, as well as for infrastructure projects.

Question 12

The expansion of governmental direct controls over the economy which characterized the "New Frontier" and "Great Society" programs of the Kennedy-Johnson years was continued and expanded by the Nixon Administration.

Accepted Answer

The Nixon Administration continued and expanded the governmental direct controls over the economy initiated by the Kennedy-Johnson years through a variety of programs, such as wage and price controls, environmental regulations, and revenue-sharing arrangements with state and local governments.

Question 13

Which of the following did not occur during the period 1960-95?

Accepted Answer

All of the listed events occurred during the period 1960-95, including inflation, growth of federal budget and trade deficits, and rising unemployment rates.

Question 14

Economic history shows that stock market averages are useful predictors of the future.

Accepted Answer

The stock market averages may give an indication of how the economy is performing currently, but they are not always a reliable predictor of the future. They can be affected by numerous factors, including political events, individual company performance, and global economic conditions. Therefore, it is important to use caution when making investment decisions based solely on stock market averages.

Question 15

Monetarists maintain that the increase in the money supply can explain the inflation of the 1970s ?and 1980s when one considers the bonds purchased by the Fed to finance the federal deficits of the period.

Accepted Answer

Monetarists argue that inflation is caused by an increase in the money supply, and point to the Fed's purchase of bonds to finance federal deficits as an example of this. They believe that increasing the money supply leads to an increase in demand for goods and services, which can drive up prices. Therefore, the statement is true.

Question 16

In the 1970s,the relationship between stock-market prices and the consumer price index was roughly equal to that of the 1920s,rising in roughly equal amounts.

Accepted Answer

In the 1970s, stock-market prices and the consumer price index (CPI) did not rise in roughly equal amounts. The 1970s were characterized by high inflation rates (reflected in the rising CPI), while stock-market prices experienced significant volatility and did not keep pace with inflation, leading to real losses for investors.

Question 17

After the inflation of the Johnson-Nixon-Ford years (1963-1976),the Carter Administration,while still inflationary,managed to slow down the rate of advancing prices.

Accepted Answer

The Carter Administration (1977-1981) actually saw an acceleration in the rate of inflation, with prices increasing at a faster pace compared to the previous administrations, culminating in what is often referred to as the "Great Inflation" period of the 1970s.

Question 18

The techniques of government regulation in the U.S.are intended to increase the degree of competitiveness in the domestic and international marketplaces.

Accepted Answer

The techniques of government regulation in the U.S. are intended to increase the degree of competitiveness in the domestic and international marketplaces.

Question 19

Unlike the 1930s,the Federal Reserve System followed an easy money policy in the first decade?of the 2000s and,consequently,was able to prevent a severe recession from following a period of notably high economic activity.

Accepted Answer

The statement is true. The Federal Reserve System followed an easy money policy in the 2000s, which helped prevent a severe recession following a period of high economic activity. This policy involved reducing interest rates and increasing the money supply to stimulate economic growth. In contrast, during the 1930s, the Federal Reserve implemented a tight money policy, which contributed to the severity and length of the Great Depression.

Question 20

The years after 1960 witnessed some social and economic changes of extraordinary magnitude,including all of the following except

Accepted Answer

The Cold War did not actually end in the early 1970s and defense spending did not decline significantly from the Cold War years of the 1950s. This statement is factually incorrect.

Quiz 30: To the New Millennium and Beyond