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Exam 24: The Great Depression

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Question 1

True/False

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The New Deal succeeded in ending the Great Depression.

A) True
B) False

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Question 2

Multiple Choice

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Which view of the causes of the Great Depression emphasizes that there is little evidence that the economy was suffering from any real shortage of money; the problems,instead,stemmed from a fall of private consumption and investment spending?

A) The Monetarists'
B) The Keynesians'
C) The Austrians'
D) The International View

E) None of the above
F) A) and C)

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Question 3

Multiple Choice

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During the worst year of the Great Depression,according to the official statistics,about what percentage of the labor force was unemployed?

Discuss the debate over whether expansionary monetary or fiscal policy would have successfully pulled the U.S.economy out of the Great Depression.

How do Friedman and Schwartz (1963),Temin (1989),Bernanke (1995)and Kindleberger (1973)differ in the factors they consider important in causing the severity of the Great Depression? Which consider the bank failures of 1930 to 1932 important,and why?

What was the Smoot-Hawley Tariff Act of 1930? What were its goals? Did it achieve these goals? Explain why or why not.

Classical economists argue that all workers could have been employed during the Great Depression if they had been willing to accept falling wages.But President Hoover and his supporters recommended that hours be cut before wages which increased unemployment.

The Great Depression and the New Deal transformed the U.S.into which type of economy?

Why did the Fed do little to help the U.S.economy recover from its depression during the early thirties?

Describe the economic conditions of the Great Depression.Present the spending and money hypotheses about what caused the Great Depression.Explain the economic arguments behind each.

The Smoot-Hawley Tariff Act of 1930 is thought to have contributed to the severity of the 1930s depression because of the rise in tariff rates and the consequential drop in private consumption,savings and investment.

The Smoot-Hawley Tariff Act of 1930,like any tariff act,increased the price of the taxed imported goods as well as the domestic price of U.S.goods and services produced in the industries favored by the tariff.Consequently,any tariff negatively impacts U.S.consumers by forcing them to pay higher prices.

The Darby (1976)revisions of the 1930s unemployment data show that if you count public employment,then the 1930s were not especially severe by historical standards.

Which view of the causes of the Great Depression emphasizes factors largely external to the domestic economy,particularly the Gold Standard?

Under the gold standard of the Great Depression,any country experiencing a balance of payment deficit was expected to finance those deficits by exporting gold.The loss of gold should be followed by contractionary monetary policy,reducing demand and causing prices to fall.All countries operating under the gold standard followed these rules of the game throughout the Great Depression.

Field (2003) claims that the period from 1929 to 1941 was the strongest period of what in ?U.S.history?

Keynesian economists link the start of the Great Depression to the drop in construction spending and the downturn in consumption following the stock market crashes of 1929.

The International View of the Great Depression blames the contraction in the U.S.economy on

Today,the Federal Reserve System can contract the money supply by

Which view of the causes of the Great Depression emphasizes the decline in the money supply which caused aggregate demand for goods and services to shrink,leading businesses to cut production and employment?