Question 1

During the Great Depression fiscal and monetary policy was characterized by

Accepted Answer

A) an increase in tax rates and a contraction in the money supply. 
B) a decrease in tax rates and a contraction in the money supply. 
C) a decrease in tax rates and an expansion in the money supply. 
D) an increase in tax rates and an expansion in the money supply. 
A) an increase in tax rates and a contraction in the money supply. 
B) a decrease in tax rates and a contraction in the money supply. 
C) a decrease in tax rates and an expansion in the money supply. 
D) an increase in tax rates and an expansion in the money supply. A

Question 2

The Great Depression illustrates that monetary policy is

Accepted Answer

A) effective against inflation but incapable of dealing with a decline in output. 
B) a source of economic instability if utilized inappropriately. 
C) incapable of reversing an economic downturn when the money supply is increasing at a constant rate. 
D) incapable of reversing a major downturn unless the recession stems from inflation. 
A) effective against inflation but incapable of dealing with a decline in output. 
B) a source of economic instability if utilized inappropriately. 
C) incapable of reversing an economic downturn when the money supply is increasing at a constant rate. 
D) incapable of reversing a major downturn unless the recession stems from inflation. B

Question 3

If fiscal policy were able to exert a significant impact on the economy during the Great Depression, we would expect

Accepted Answer

A) an increase in government expenditures and a reduction in budget deficits. 
B) an increase in government expenditures and an increase in budget deficits. 
C) a decrease in government expenditures and a reduction in budget deficits. 
D) a decrease in government expenditures and an increase in budget deficits. 
A) an increase in government expenditures and a reduction in budget deficits. 
B) an increase in government expenditures and an increase in budget deficits. 
C) a decrease in government expenditures and a reduction in budget deficits. 
D) a decrease in government expenditures and an increase in budget deficits. B

Question 4

What impact did the National Industrial Recovery Act (NIRA) of 1933 have on industrial output?

Accepted Answer

A) Industrial output had been declining, but it stabilized during the months following passage of the NIRA. 
B) Industrial output increased sharply after the passage of the NIRA. 
C) Industrial output had begun to increase, but it fell sharply following the passage of the NIRA. 
D) Industrial output and employment declined during the months prior to passage of the NIRA, and the legislation was unable to stop the decline. 
A) Industrial output had been declining, but it stabilized during the months following passage of the NIRA. 
B) Industrial output increased sharply after the passage of the NIRA. 
C) Industrial output had begun to increase, but it fell sharply following the passage of the NIRA. 
D) Industrial output and employment declined during the months prior to passage of the NIRA, and the legislation was unable to stop the decline.

Question 5

The New Deal policies of the Great Depression resulted in

Accepted Answer

A) a reduction in unemployment and an increase in real output. 
B) a stable economic environment and an increase in investment. 
C) economic uncertainty and prolonged unemployment. 
D) a quick end to the depression once the policies had taken effect. 
A) a reduction in unemployment and an increase in real output. 
B) a stable economic environment and an increase in investment. 
C) economic uncertainty and prolonged unemployment. 
D) a quick end to the depression once the policies had taken effect.

Question 6

The National Industrial Recovery Act essentially legalized

Accepted Answer

A) labor unions. 
B) business cartels. 
C) minimum wage laws. 
D) import tariffs. 
A) labor unions. 
B) business cartels. 
C) minimum wage laws. 
D) import tariffs.

Question 7

The National Industrial Recovery Act, passed in 1933, was an attempt to

Accepted Answer

A) break monopolies and cartels, and introduce competition into several different industries. 
B) fix prices, wages, and quotas for several industries in an effort to keep prices high. 
C) lower corporate taxes and remove collusive behavior in an effort to keep U.S. firms competitive with foreign manufacturers. 
D) create a stable economic environment that would encourage investment and expansion in the industrial sector of the economy. 
A) break monopolies and cartels, and introduce competition into several different industries. 
B) fix prices, wages, and quotas for several industries in an effort to keep prices high. 
C) lower corporate taxes and remove collusive behavior in an effort to keep U.S. firms competitive with foreign manufacturers. 
D) create a stable economic environment that would encourage investment and expansion in the industrial sector of the economy.

Question 8

An analysis of stock market prices during 1929 to 1930 indicates that

Accepted Answer

A) the stock market crash of October 1929 was the cause of the Great Depression of the 1930s. 
B) stock market prices rose steadily throughout the entire year of 1930. 
C) after recovering most of its value from the crash of October 1929, stock prices again declined steadily during the debate and passage of the Smoot-Hawley trade bill. 
D) after the crash of October 1929, the Smoot-Hawley trade bill marked the beginning of a steady recovery of the stock market. 
A) the stock market crash of October 1929 was the cause of the Great Depression of the 1930s. 
B) stock market prices rose steadily throughout the entire year of 1930. 
C) after recovering most of its value from the crash of October 1929, stock prices again declined steadily during the debate and passage of the Smoot-Hawley trade bill. 
D) after the crash of October 1929, the Smoot-Hawley trade bill marked the beginning of a steady recovery of the stock market.

Question 9

High marginal tax rates, such as those instituted during the Great Depression, will

Accepted Answer

A) increase the incentive of people to earn. 
B) lead to a proportional increase in tax revenue and a reduction in the size of the budget deficit. 
C) cause people to work, earn, and invest less than would be the case if marginal tax rates were lower. 
D) attract workers from other countries where tax rates are lower. 
A) increase the incentive of people to earn. 
B) lead to a proportional increase in tax revenue and a reduction in the size of the budget deficit. 
C) cause people to work, earn, and invest less than would be the case if marginal tax rates were lower. 
D) attract workers from other countries where tax rates are lower.

Question 10

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Accepted Answer

A) They increase employment and thereby promote the growth of GDP. 
B) They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. 
C) They protect domestic producers and thereby promote economic growth. 
D) Both a and c are correct. 
A) They increase employment and thereby promote the growth of GDP. 
B) They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. 
C) They protect domestic producers and thereby promote economic growth. 
D) Both a and c are correct.

Question 11

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

Accepted Answer

A) the Keynesian view 
B) the supply-side view 
C) the view that the federal government should maintain a balanced budget 
D) the new classical view that fiscal policy exerts little impact on demand and output 
A) the Keynesian view 
B) the supply-side view 
C) the view that the federal government should maintain a balanced budget 
D) the new classical view that fiscal policy exerts little impact on demand and output

Question 12

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?

Accepted Answer

A) increase trade restrictions and tariffs to save jobs and enhance tax revenue 
B) a reduction in the money supply in order to strengthen the dollar and combat inflation 
C) keep taxes low in order to stimulate production and minimize the decline in personal and business income 
D) institute frequent policy changes in order to search for and find the policy combination that would be most effective 
A) increase trade restrictions and tariffs to save jobs and enhance tax revenue 
B) a reduction in the money supply in order to strengthen the dollar and combat inflation 
C) keep taxes low in order to stimulate production and minimize the decline in personal and business income 
D) institute frequent policy changes in order to search for and find the policy combination that would be most effective

Question 13

Most economists believe the severity and duration of the Great Depression was primarily the result of

Accepted Answer

A) the large budget deficits of the federal government. 
B) the reduction in tariffs and the influx of foreign imports during the early 1930s. 
C) the excessive use of credit cards. 
D) a sharp contraction in the money supply. 
A) the large budget deficits of the federal government. 
B) the reduction in tariffs and the influx of foreign imports during the early 1930s. 
C) the excessive use of credit cards. 
D) a sharp contraction in the money supply.

Question 14

Which of the following contributed to the severity of the Great Depression in the 1930s?

Accepted Answer

A) large increases in tax rates in 1932 and again in 1936 
B) large increases in the money supply during the early 1930s 
C) a reduction in tariffs protecting many U.S. industries 
D) a substantial tax rate reduction, which led to large deficits and high interest rates during the early 1930s 
A) large increases in tax rates in 1932 and again in 1936 
B) large increases in the money supply during the early 1930s 
C) a reduction in tariffs protecting many U.S. industries 
D) a substantial tax rate reduction, which led to large deficits and high interest rates during the early 1930s

Question 15

Which of the following statements about the Great Depression is correct?

Accepted Answer

A) The 1929 stock market crash explains the lengthy duration of the Great Depression. 
B) The severity of the economic downturn, if not its onset, was the result of perverse monetary, fiscal, and regulatory policies. 
C) The sharp decreases in tariff rates and tax rates cushioned the downturn and limited it to three years. 
D) The Great Depression indicates that monetary policy affects prices but exerts little impact on output. 
A) The 1929 stock market crash explains the lengthy duration of the Great Depression. 
B) The severity of the economic downturn, if not its onset, was the result of perverse monetary, fiscal, and regulatory policies. 
C) The sharp decreases in tariff rates and tax rates cushioned the downturn and limited it to three years. 
D) The Great Depression indicates that monetary policy affects prices but exerts little impact on output.

Question 16

During the Great Depression of 1929-1933,

Accepted Answer

A) the Fed allowed the money supply to contract substantially. 
B) the Fed increased the money supply sharply. 
C) Congress cut tax rates sharply. 
D) Congress cut tariffs substantially. 
A) the Fed allowed the money supply to contract substantially. 
B) the Fed increased the money supply sharply. 
C) Congress cut tax rates sharply. 
D) Congress cut tariffs substantially.

Question 17

Which of the following conditions during 2008-2009 most closely paralleled the economic conditions of the Great Depression?

Accepted Answer

A) record-high unemployment rates for a period of many years 
B) a sharp and prolonged contraction in the money supply 
C) significant increases in taxes and trade restrictions in order to counter budget deficits 
D) frequent policy changes that generated an unstable and unpredictable economic climate 
A) record-high unemployment rates for a period of many years 
B) a sharp and prolonged contraction in the money supply 
C) significant increases in taxes and trade restrictions in order to counter budget deficits 
D) frequent policy changes that generated an unstable and unpredictable economic climate

Question 18

The Great Depression was an era marked by

Accepted Answer

A) steady growth in GDP and a decline in the rate of unemployment. 
B) a prolonged period of high unemployment and output substantially below its potential. 
C) a large decline in the stock market followed by a steady recovery. 
D) a failure of expansionary monetary policy to stimulate output and employment. 
A) steady growth in GDP and a decline in the rate of unemployment. 
B) a prolonged period of high unemployment and output substantially below its potential. 
C) a large decline in the stock market followed by a steady recovery. 
D) a failure of expansionary monetary policy to stimulate output and employment.

Question 19

Which of the following was true with regard to the Great Depression?

Accepted Answer

A) The policies of the New Deal brought the Great Depression to an end well before World War II. 
B) Sound economic policy was followed during this era, which makes the length and severity of the Great Depression puzzling to economists. 
C) The length and severity of the Great Depression was the result of unsound economic policies followed by both the Hoover and Roosevelt Administrations. 
D) The Great Depression was largely the result of the highly expansionary monetary policy of the Fed during the 1930s. 
A) The policies of the New Deal brought the Great Depression to an end well before World War II. 
B) Sound economic policy was followed during this era, which makes the length and severity of the Great Depression puzzling to economists. 
C) The length and severity of the Great Depression was the result of unsound economic policies followed by both the Hoover and Roosevelt Administrations. 
D) The Great Depression was largely the result of the highly expansionary monetary policy of the Fed during the 1930s.

Question 20

Why do nations impose trade barriers, such as those instituted during the Great Depression, that make it difficult for their own citizens to trade with people in other countries?

Accepted Answer

A) Trade restrictions are a good way for a country to increase the total employment and income level of its citizens. 
B) As the experience during the 1930s illustrates, trade restrictions are an effective way to increase exports and tax revenues. 
C) Trade restrictions provide gains to domestic residents at the expense of foreigners. 
D) Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace. 
A) Trade restrictions are a good way for a country to increase the total employment and income level of its citizens. 
B) As the experience during the 1930s illustrates, trade restrictions are an effective way to increase exports and tax revenues. 
C) Trade restrictions provide gains to domestic residents at the expense of foreigners. 
D) Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.

Exam 21: Appendix: Lessons From the Great Depression

During the Great Depression fiscal and monetary policy was characterized by

The Great Depression illustrates that monetary policy is

If fiscal policy were able to exert a significant impact on the economy during the Great Depression, we would expect

What impact did the National Industrial Recovery Act (NIRA) of 1933 have on industrial output?

The New Deal policies of the Great Depression resulted in

The National Industrial Recovery Act essentially legalized

The National Industrial Recovery Act, passed in 1933, was an attempt to

An analysis of stock market prices during 1929 to 1930 indicates that

High marginal tax rates, such as those instituted during the Great Depression, will

How do high tariffs and other restraints on international trade affect a nation's prosperity?

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?

Most economists believe the severity and duration of the Great Depression was primarily the result of

Which of the following contributed to the severity of the Great Depression in the 1930s?

Which of the following statements about the Great Depression is correct?

During the Great Depression of 1929-1933,

Which of the following conditions during 2008-2009 most closely paralleled the economic conditions of the Great Depression?

The Great Depression was an era marked by

Which of the following was true with regard to the Great Depression?

Why do nations impose trade barriers, such as those instituted during the Great Depression, that make it difficult for their own citizens to trade with people in other countries?

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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