Lesson 7

Question 1 (6725148):In this example of the Classical adjustment process, the recession is avoided when _______________________________ isdecreasedby $100 billion which effectively re-balances the leakages and injections in the economy.

Type:Multiple Choice

Points awarded:1.00 / 1.00

Your Answer(s):Saving by Households

Correct answer(s):deficit spending by Governmentimport spending by Foreign MarketsConsumption spending by HouseholdsSaving by Households

Question 2 (6725125):In the Classical Theory, if businesses want fewer funds, the interest rate will _________ and people will save less money and consume more.



Your Answer(s):increase

Correct answer(s):decreaseincreasestay the same in the Bathtubnone of the above

Question 3 (6725119):In the Classical Bathtub Model the water flowing into the tub (injection) represents the flow of Consumption and _____________ spending.



Your Answer(s):Investment

Correct answer(s):GovernmentNet ExportInvestment None of the above

Question 4 (6725138):Even though interest rates were lower in the Great Depression, businesses became ____________ about the economy and did not spend enough on Investment to return Savings into the flow.



Your Answer(s):pessimistic

Correct answer(s):pessimisticoptimisticenthusiasticconfident

Question 5 (6725128):The dynamics of a ___________ interest rate will eliminate excess savings and ____________ prices and wages will maintain constant consumption.



Your Answer(s):flexible

Correct answer(s):rigidfantasyflexiblenone of the above

Question 6 (6725133):In the Great Depression, spending on U.S. _________was reduced by foreign countries as well as U.S. spending on their products which made the downward spiral even worse on a global basis.



Your Answer(s):Exports

Correct answer(s):ExportsImportsInternet servicesRap music

Question 7 (6725142):Although wages and prices did fall in the early 1930s, Consumption spending fell _____________ on a relative basis and resulted in the quantity of AS being much greater than the quantity of AD



Your Answer(s):less

Correct answer(s):more lessonly the same amountnone of the above

Question 8 (6725112):Adam Smiths ___________ economics is the idea that an economy with less government restriction serves people best for allowing free allocation of resources.



Your Answer(s):laissez faire

Correct answer(s):ceteris paribuscarpe diemlaissez fairenone of the above

Question 9 (6725146):In this example of the Classical adjustment process, a recession seems to be starting with Business Investment spendingdecliningby __________ billion dollars because of pessimism regarding profit opportunities in the short run.



Your Answer(s):100

Correct answer(s):100200400500

Question 10 (6725117):The Law of Markets (Ricardo, Mill, et al) argues that recession (low business activity) is due to ___________________.



Your Answer(s):a lack of supply

Correct answer(s):a preceding inflationa lack of demanda lack of supplya preceding deflation

Question 11 (6725131):Classical Theory was questioned in the ___________ with the onset of the Great Depression in theUnited Statesand other industrialized nations.



Your Answer(s):1930s

Correct answer(s):1990s1970s1950s1930s

Question 12 (6725136):As ______________ continued to expand in the early 1930s, Aggregate Supply continued to be greater than Aggregate Demand prompting businesses to further cuts in employment and output.



Your Answer(s):inventories

Correct answer(s):InvestmentExportsinventories Imports

Question 13 (6725139):Both I (investment) and C (consumption) ___________ significantly (and in that order) at the start of the Great Depression.



Your Answer(s):fell

Correct answer(s):rosefellincreasednone of the above

Question 14 (6725144):In this example of a Classical adjustment to declining Aggregate Demand, there is ________________ contributed to an understanding of todays modern economic theories.



Your Answer(s):something

Correct answer(s):nothingsomethingeverythingnone of the above

Question 15 (6725122):According to the Classical Theory, the level of water in the Bathtub (employment, income, and output) is always at the maximum because _________ is (are) assumed to create Demand.



Your Answer(s):Supply

Correct answer(s):International TradeGovernmentSupplyAll the above

Question 16 (6725153):In this example of the Classical adjustment process, Output will tend to be maintained at the full employment level of _________ billion units.



Your Answer(s):2500


Question 17 (6725151):In this example of the Classical adjustment process, employment will tend to be maintained at the full employment level of _________ million people



Your Answer(s):120


Question 18 (6725115):According to Says Law: Recession is unlikely since people receive money to produce and the funds they receive _________ be spent to buy other goods.



Your Answer(s):will

Correct answer(s):will notwill sometimeswillnone of the above

Question 19 (6725130):In the Classical Theory if Aggregate Demand decreases only a decrease in the __________ level is possible since the assumption is for a constant level of full employment.



Your Answer(s):unemployment rate

Correct answer(s):endorphinadrenalineunemployment rateprice

Question 20 (6725149):In this example of the Classical adjustment process, the RealSpendingGDP_________ drop below the full employment level of $5000 billion.



Your Answer(s):either b. or c.

Correct answer(s):will drasticallydoes notmay brieflyeither b. or c.

(6725143):In this example of a Classical adjustment to declining Aggregate Demand, there would be _____________ controversy among todays economists regarding the adjustment process and the actual outcome of that adjustment process.



Your Answer(s):considerable

Correct answer(s):novery littleconsiderableall the above

Question 2 (6725148):In this example of the Classical adjustment process, the recession is avoided when _______________________________ isdecreasedby $100 billion which effectively re-balances the leakages and injections in the economy.



Your Answer(s):Saving by Households

Correct answer(s):deficit spending by Governmentimport spending by Foreign MarketsConsumption spending by HouseholdsSaving by Households

Question 3 (6725113):According to the ______________ theory the government that governs least is thought to be the government that governs best.



Your Answer(s):laissez faire

Correct answer(s):ceteris paribuscarpe diemlaissez fairenone of the above

Question 4 (6725136):As ______________ continued to expand in the early 1930s, Aggregate Supply continued to be greater than Aggregate Demand prompting businesses to further cuts in employment and output.



Your Answer(s):inventories

Correct answer(s):InvestmentExportsinventories Imports

Question 5 (6725118):The Law of Markets (Ricardo, Mill, et al) argues that business activity can be increased by stimulating _______________ .



Your Answer(s):supply

Correct answer(s):supply demandinflationdeflation

Question 6 (6725134):In the Great Depression, the formulaGDP= C + I + G + Xn became an interactive exercise for a(n) _______________ economy.



Your Answer(s):contracting

Correct answer(s):expandingcontracting growingvigorous

Question 7 (6725150):In this example of the Classical adjustment process, the RealProductionGDPof the Business sector _________ drop below the full employment level of $5000 billion.



Your Answer(s):either c. or d. below

Correct answer(s):will drasticallyeither c. or d. belowdoes notmay briefly

Question 8 (6725128):The dynamics of a ___________ interest rate will eliminate excess savings and ____________ prices and wages will maintain constant consumption.



Your Answer(s):flexible

Correct answer(s):rigidfantasyflexiblenone of the above

Question 9 (6725146):In this example of the Classical adjustment process, a recession seems to be starting with Business Investment spendingdecliningby __________ billion dollars because of pessimism regarding profit opportunities in the short run.



Your Answer(s):100


Question 10 (6725153):In this example of the Classical adjustment process, Output will tend to be maintained at the full employment level of _________ billion units.



Your Answer(s):2500


Question 11 (6725119):In the Classical Bathtub Model the water flowing into the tub (injection) represents the flow of Consumption and _____________ spending.



Your Answer(s):Investment

Correct answer(s):GovernmentNet ExportInvestment None of the above

Question 12 (6725152):In this example of the Classical adjustment process,unemployment will tend to hold steady at the natural level of _________ million people.



Your Answer(s):five

Correct answer(s):zero (no unemployment)twofiveten

Question 13 (6725137):In the Great Depression, businesses lost their ____________ the economy and did not spend enough on Investment to return Savings into the flow even though interest rates were lower.



Your Answer(s):all the below

Correct answer(s):all the below confidence inoptimism forenthusiasm for

Question 14 (6725122):According to the Classical Theory, the level of water in the Bathtub (employment, income, and output) is always at the maximum because _________ is (are) assumed to create Demand.



Your Answer(s):Supply

Correct answer(s):International TradeGovernmentSupplyAll the above

Question 15 (6725129):In the Classical Theory if Aggregate Demand increases only an increase in the __________ level is possible since the assumption is for a constant level of full employment.



Your Answer(s):unemployment

Correct answer(s):priceendorphinadrenalineunemployment

Question 16 (6725139):Both I (investment) and C (consumption) ___________ significantly (and in that order) at the start of the Great Depression.



Your Answer(s):fell

Correct answer(s):rosefellincreasednone of the above

Question 17 (6725115):According to Says Law: Recession is unlikely since people receive money to produce and the funds they receive _________ be spent to buy other goods.



Your Answer(s):will

Correct answer(s):will notwill sometimeswillnone of the above

Question 18 (6725131):Classical Theory was questioned in the ___________ with the onset of the Great Depression in theUnited Statesand other industrialized nations.



Your Answer(s):1930s

Correct answer(s):1990s1970s1950s1930s

Question 19 (6725125):In the Classical Theory, if businesses want fewer funds, the interest rate will _________ and people will save less money and consume more.



Your Answer(s):decrease

Correct answer(s):decreaseincreasestay the same in the Bathtubnone of the above

Question 20 (6725142):Although wages and prices did fall in the early 1930s, Consumption spending fell _____________ on a relative basis and resulted in the quantity of AS being much greater than the quantity of AD



Your Answer(s):more

Correct answer(s):more lessonly the same amountnone of the above

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