University of California, Davis – ECN 1b Chapter 14 Chapter 14 The Great Recession, the Great Depression, and Great Macroeconomic Debates Concept Map I. The Great Recession A. Depth and Duration B. Aggregate Demand and Aggregate Supply Analysis II. The Great Depression A. Depth and Duration B. Aggregate Demand and Aggregate Supply Analysis III. Classical Economics IV. Keynesian Economics MULTIPLE-CHOICE QUESTIONS 1. One similarity between the Great Recession and the Great Depression is that, in both episodes: a. large numbers of banks failed. b. there were significant problems in financial markets. c. the U.S. government raised taxes. d. the U.S. government allowed the money supply to decrease. e. the unemployment rate exceeded 20%. ANS: 2. Which of the following best summarizes the main causes of the Great Recession? a. Oil-producing countries deliberately raised the price of petroleum, leading to inflation and a deep recession. b. The Federal Reserve raised short-term interest rates very high in an effort to decrease inflation, which also drove the economy into a recession. c. The end of overseas war efforts led to a deep decrease in federal spending, which reduced employment and caused a recession. d. The stock market collapsed following the end of a bubble in technology stock prices, which caused a decrease in investment spending and a recession. e. The collapse of housing prices led to decreased wealth and significant problems in financial markets, as well as a decrease in expected income and a stock market collapse. ANS: 3. The Great Recession began in: a. December 2009. b. June 2009. c. August 1929. d. December 2007. e. January 1930. ANS: 4. During the Great Recession, the unemployment rate climbed as high as _________ and remained around 8% _________ months after the recession began. a. 15%; 75 b. 25%; 8 c. 10%; 60 d. 20%; 12 e. 35%; 80 ANS: 5. The Great Recession ended in: a. June 2009. b. January 2009. c. March 1933. d. June 1938. e. June 2012. ANS: 6. The Great Recession lasted for: a. 12 months. b. 18 months. c. 32 months. d. 44 months. e. 56 months. ANS: 7. The Great Recession lasted from _________ to _________. a. August 1929; March 1933 b. May 1937; June 1938 c. March 2001; November 2001 d. December 2007; June 2009 e. July 1991; June 1992 ANS: 8. The Great Recession began in __________ and lasted for __________. a. June 2011; 12 months b. August 1929; 44 months c. December 2007; 18 months d. May 1937; 14 months e. March 2001; 8 months ANS: 9. The Great Recession was similar to other recessions since World War II in that: a. there was extremely high inflation. b. real gross domestic product (GDP) initially declined and then recovered sometime later. c. real GDP increased rapidly and then leveled off. d. the rate of unemployment was unchanged. e. the trade deficit fell to zero. ANS: 10. The Great Recession was similar to other recessions since World War II in that: a. the rate of unemployment increased and then decreased at a later time. b. the rate of inflation was extremely high. c. real gross domestic product (GDP) rapidly increased and then leveled off. d. the rate of economic growth was unchanged. e. the rate of unemployment decreased and then increased at a later time. ANS: 11. The Great Recession was similar to most other recessions since World War II in that: a. the economy rapidly bounced back and resumed normal growth quickly. b. the economy never really declined much at all. c. the economy did not return to normal for at least one year. d. the economy increased rapidly following the beginning of the recession. e. the economy essentially collapsed and never recovered. ANS: 12. The Great Recession was different from other recessions since World War II in that: a. real gross domestic product (GDP) initially declined and then recovered sometime later. b. the trade deficit was largely unaffected. c. the rate of unemplo…
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