As a result, Keynesian economists focus on _____________ changes and aggregate ____________. In regard to describing how the economy functions, Keynesian economists claim that: When U.S. aggregate demand and long-run aggregate supply decreased during the Great Recession: real gross domestic product (GDP) also decreased. d. mercantilism. A stock market crash in __________ is generally viewed as the beginning of the Great Depression. When stock prices declined during the Great Recession, it caused aggregate demand to decrease because: household wealth decreased, leading to a decline in consumer spending. When considering the basic operations of the macroeconomy, Keynesian economists argue that: the decline in real GDP was much larger and lasted longer. Classical economists believe that government intervention in the economy is unnecessary because: prices are flexible and, therefore, the economy will adjust back to full employment on its own. The Great Depression was a period of time when the world economy plunged to its deepest and brought the country to a virtual stand still. there was a stock market crash at the beginning of the depression. Now, you might say that the incomplete recovery shows that “pump-priming”, […] During the Great Recession, the unemployment rate climbed as high as _________ and remained around 8% _________ months after the recession began. The Great Recession lasted from _________ to _________. As a result: During the Great Recession, U.S. household wealth declined, leading to a decrease in aggregate demand. When the government pursued a "tight money" policy during the Great Depression, it caused aggregate demand to decrease because: it reduced consumer spending and investment spending. Practice: The Great Depression. When describing how the economy works, classical economists claim that: What is the difference between unemployment rates during the Great Depression and the Great Recession at their peaks? americainclass.org 6 Colin Gordon Professor of History ... organization of employment and relief of distress with that sturdiness and In some towns, local newspapers published the names of welfare recipients. B - Real GDP returned to its pre-recession level faster during the Great Depression than during the Great Recession. Keynesian economists believe that savings is a drain on demand because: when a recession occurs, households tend to spend less, which only worsens the recession. Which of the following graphs depicts classical economics long run correction of inflation? When considering how the economy works, classical economists hold that: the long run is more significant than the short run. Figure 17.1 “The Depression and the Recessionary Gap” shows the course of real GDP compared to potential output during the Great Depression. Classical economists believe that all prices are adjustable, therefore, in an inflationary period the increased aggregate demand would result in all prices increasing (including inputs like wages) which would then decrease aggregate supply. FDR and the Great Depression . Krugman doesn’t respond to any of my arguments but he does give us the old line that fiscal policy didn’t fail during the Great Depression it wasn’t tried. Based on the belief that prices are very flexible, classical economists conclude that: government intervention in the economy is unnecessary. During the Great Recession, __________ caused long-run aggregate supply to decrease. Which of the following are supported by Keynesian economics? Site Navigation. Which of the following led to the Great Recession? Prior to the Great Depression, most Americans had negative views of government welfare programs and refused to go on welfare. During the presidential campaign of 1932, Franklin Roosevelt criticized the deficits under Hoover, and on taking office in March 1933 he moved to cut federal spending, including veterans' benefits. b. Keynesian economics. After year 2 of the Great Recession, the United States began to experience _______ in real GDP and _______ in the unemployment rate. During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because: If a classical economist were asked which factor is most important to ensuring economic growth, how might he respond? Thus, on the eve of the Great Depression of the 1930's, a larger proportion of the American people were dependent on cash wages for their support than ever before. Note that E1 and E2, respectively, are the initial and final equilibrium points before and after the wealth decrease. Our mission is to provide a free, world-class education to anyone, anywhere. Identify whether the following statement is more likely to come from a classical economist or a Keynesian economist. Keynesian economists believe that more focus should be placed on aggregate demand than aggregate supply because: governments can promote full employment by stimulating aggregate demand. Graph ____ depicts the conditions of the Great Recession, and graph _____ depicts the conditions of the Great Depression. According to classical economics, a decrease in aggregate demand causes the price level to _____________ in the long run. What started as Black Tuesday on October 29, 1929, only culminated prior … According to Keynesian economists, this is a result likely from a change in aggregate ____. When financial markets went into a crisis during the Great Recession, it caused long-run aggregate supply to decrease because: there were new regulations limiting the amount of loans that could be made. Keynesian economists believe that government intervention in the economy is necessary because: prices are sticky and prevent the economy from moving toward full employment. The government should allow the economy to adjust to changes in aggregate demand on its own, without interference. A decrease in U.S. housing prices would tend to cause: Assume that the natural rate of unemployment is 5%. Consider these four graphs. The "first wave" of the Great Depression first began in _________ and initially lasted for _________. As New Deal programs were enacted, the unemployment rate gradually lowered. In how many of the years after the onset of the Great Depression did the United States experience cyclical unemployment greater than 10% (Hint: only look at the rate at the beginning of each year)? These changes occur because of _____________, When the U.S. aggregate demand curve shifted to the left during the Great Depression, Which of the following economic statements would a Keynesian economist tend to support II, The short run deserves more attention than the long run, Classical economists focus on the ___________, while Keynesian economists focus on the ____________, One similarity between the Great Recession and the Great Depression is that, in both episodes, there were significant problems in financial markets, Which of the following policy statements would a classical economist tend to support, The government should allow the economy to adjust to changes in aggregate demand on its own, without interference, During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because II, The Great Recession was similar to other recessions since World War II in that, real gross domestic product (GDP) initially declined and then recovered sometime later, Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. Based on the belief that prices are sticky and inflexible, Keynesian economists conclude that: the economy is not self-correcting and can become stuck below full employment. The market tends to stability and full employment. Which pair of factors contributed to this decline in wealth? In comparison with other recessions, the Great Depression: When contrasted with other recessions, the Great Depression: Which of the following facts is/are FALSE regarding the Great Depression and the Great Recession? How many months did the Great Recession last? 11/08/2015 ° Prior to the great depression, the purpose of the federal budget was to finance the activities of the federal government. In how many of the years after the onset of the Great Depression did the United States experience cyclical unemployment greater than 10% (Hint: only look at the rate at the beginning of each year), According to classical economics, a decrease in aggregate demand causes the price level to _____________ in the long run. Graph ____ depicts the conditions of the Great Recession, and graph _____ depicts the conditions of the Great Depression. Billion… During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because:. The Great Recession lasted longer and was deeper than the average recession, in part, because: there was a major financial crisis following the collapse of housing prices. During the 1930s, America went through one of its greatest challenges: the Great Depression.President Franklin D. Roosevelt attempted to relieve the … During the Great Recession, the U.S. ________ curve shifted to the ________. The New Deal. One similarity between the Great Recession and the Great Depression is that, in both episodes: there were significant problems in financial markets. The Great Recession was different from other recessions since World War II in that: the overall economy took far longer to recover than the average. The New Deal. a. supply-side economics. Which of the following best summarizes the main causes of the Great Recession? Which school of thought will most likely support the administration's policy prescriptions? This is the currently selected item. Later a place called the stock market crash of 1929 came as a shock to most Americans and especially the bankers, that looking at the causes of the Great Depression; it was clear how America entered this … The Great Depression actually consisted of two separate recessions. A Keynesian economist would have recommended which of the following in year 1 of the Great Depression and the Great Recession? When Herbert Hoover became President in 1929, the stock market was climbing to unprecedented levels, and some investors were taking advantage of low interest rates to buy stocks on credit, pushing prices even higher. During the Great Depression, a major financial crisis followed the collapse of the stock market, which led to: The Great Recession began in __________ and lasted for __________. the increase in unemployment was much greater and lasted longer. This would tend to cause. During the Great Depression, there was a financial crisis and a stock market crash, both of which: contributed to a very long and deep depression. The Classical Model was popular before the Great Depression. Prior to the Great Depression, African Americans worked primarily in unskilled jobs. Khan Academy is a 501(c)(3) nonprofit organization. The popular theory prior to the Great Depression that the economy will automatically adjust to achieve full employment, in the long run, is classical economics. The British economist John Maynard Keynes developed this theory in the 1930s. a decrease in consumer confidence and a decrease in financial market stability. Reason Class view the full answer Previous question Next question Oh no! Consider these four graphs. __________ would have caused such a decrease. The Great Depression in the United States began as an ordinary recession in the summer of 1929, but became increasingly worse … Between years 8 and 9 of the Great Depression, unemployment ____. A - Unemployment rates were higher during the Great Depression than during the Great Recession. Causes of the Great Depression the 1920’s was period of grate happiness among the people of all kind, but it was not until the end of this decade that the financial had been noticed. Depression and Anxiety . initiate an infrastructure program designed to build bridges. This would have been caused by, When contrasted with other recessions, the Great Depression, If prompted to describe fundamental beliefs about the economy, a Keynesian economist would state that, According to classical economists, changes in aggregate demand have little effect on the overall economy, and therefore, long-run aggregate supply is the primary source of economic growth, If real GDP was $977 billion in 1929, by how much did real GDP decrease at the peak of the Great Depression, During the Great Depression, the U.S. aggregate demand curve shifted to the left, in part, because, During the Great Recession, there was a financial crisis, a stock market crash, and a collapse in housing prices, all of which, contributed to a very long and deep recession, During the Great Recession, the U.S. ________ curve shifted to the ________. Although AFL membership fell to fewer than 3 million amidst large-scale unemployment, widespread economic hardship created sympathy for working people. Classical economists focus on the ___________, while Keynesian economists focus on the ____________. Identify which of the following graphs will be drawn by classical and Keynesian economists, respectively, for an economy experiencing a decrease in wealth. The economy did not approach potential output until 1941, when the pressures of world war forced sharp increases in aggregate demand. During the Great Recession, ___________ caused aggregate demand to decrease. Aggregate demand and long-run aggregate supply decreased, causing unemployment to rise to 10%. The Great Depression had defied all prior attempts to end it. The Great Depression initially led to a sharp drop in union membership, but when economy began to recover in 1933, so did union membership. One of the reasons why the Great Depression was so severe is that: When the U.S. aggregate demand curve shifted to the left during the Great Depression: Savings is crucial to economic growth because it leads to investment in productive capital. b. Which of the following events would have caused such a decrease? As a result, the unemployment rate _________ and the price level _________, During the Great Depression, aggregate demand decreased. To ensure the best experience, please update your browser. The unemployment rate was over 25% at the height of the Great Depression. Which of the following events would have caused such a decrease, When the government pursued a "tight money" policy during the Great Depression, it caused aggregate demand to decrease because, it reduced consumer spending and investment spending, The back-to-back recessions that began in 1929 and ended in 1938 are collectively known as, If a Keynesian economist were asked to make a statement about the relationship between the government and the economy, what might she say, Keynesian economists believe that prolonged recessions are possible because, prices are sticky and do not adjust quickly during economic downturns, During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because, The Great Recession was similar to most other recessions since World War II in that, the economy did not return to normal for at least one year, If asked about the basic functioning of the economy, a Keynesian economist would state that, the market tends toward instability and cyclical unemployment, Which of the following best summarizes the main causes of the Great Recession, 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, If you asked a classical economist which economic time frame she prioritized, how might she respond, When U.S. housing prices declined prior to and during the Great Recession, it caused aggregate demand to decrease because, household wealth decreased, causing a decline in consumer spending, Assume that the natural rate of unemployment is 5%. When 9,000 banks failed during the Great Depression, it caused aggregate demand to decrease because: the government didn't help the banks, causing the money supply to decrease. Which of the following could have caused the change in real GDP from year 0 to year 2 during the Great Recession? One difference between the Great Recession and the Great Depression is that: the U.S. government reduced taxes during the Great Recession but raised them during the Great Depression. Which of the following factors caused this decrease in consumer sentiment? Which of the following economic statements would a Keynesian economist tend to support? Wisconsin pioneered in enacting an unemployment insurance law in 1932. b. lower wages that would increase the quantity of labor demanded and reduce unemployment. Classical economists believe that all prices are adjustable, therefore, in a recession the lack of aggregate demand would result in all prices decreasing (including inputs like wages) which would then increase aggregate supply. Classical economists believe that when aggregate demand changes, the economy remains at full employment because: Prior to the Great Depression, U.S. stock prices decreased dramatically. When held up against other economic downturns, the Great Depression: During the Great Depression, thousands of U.S. banks failed. It is estimated that unemployment hit 24.9% during the Great Depression. Which of the following statements is consistent with what happened during the Great Recession? It looks like your browser needs an update. During the Great Recession, the U.S. aggregate demand curve shifted to the left, in part, because: Classical economists believe that savings is ____________, while Keynesian economists believe that savings is ____________. 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