Economic Instability

Multiple Choice

Which of the following best describes a recession in the context of business cycles?

• A period of rapid economic growth

• Economic decline lasting at least two quarters

• A time when unemployment is at its lowest

• A phase where new technologies are widely adopted

Multiple Choice

Which phase of the business cycle is characterized by declining real GDP and rising unemployment?

• Expansion

• Peak

• Recession

• Trough

Multiple Select

Which of the following are causes of the business cycle?

• External Shocks

• Technological Advancements

• Fiscal Policy Shocks

• Speculation and 'Bubbles'

Multiple Select

During the period of unprecedented economic growth before the Great Depression, what factors contributed to increased wage employment?

• Migration North and into Urban Areas

• More Women in Workforce

• Technological Advancements

• Fiscal Policy Shocks

Fill in the Blank

Consumer confidence began to wane in ___ 1929, signaling potential trouble for the economy.

Multiple Choice

What were the compounding troubles that intensified the effects of the Great Depression, particularly in relation to unemployment and farming?

• Government subsidies, technological advancements, and trade agreements.
• Natural disasters, high wages, and foreign investments.
• The Dust Bowl, industrial layoffs, lack of government support, and bank failures.
• Rising stock prices, increased exports, and urban migration.

Multiple Choice

Which of the following was NOT a part of the Recovery and Legislative Reform during the New Deal era?

• Social Security

• Federal Deposit Insurance Corporation (FDIC)

• Securities and Exchange Commission (SEC)

• Federal Reserve Bank

Multiple Select

Which of the following statements about traditional mortgage finance is/are correct?

• It involves a direct relationship between homeowner and bank.

• Real estate is considered an investment.

• Banks sell off loans to investment banks.

• Homeowners make payments directly to investment banks.

Multiple Choice

How did the government's approach to home ownership changed over time and the impact it had on the housing market.

• The approach remained unchanged, causing no significant effects on home prices or market accessibility.
• The government discouraged home ownership, leading to a decline in housing prices and market stability.
• Government policies promoted renting over ownership, resulting in a stagnant housing market with low demand.
• The government's approach evolved to favor home ownership, significantly impacting the housing market by increasing accessibility and driving up home prices.

Fill in the Blank

Banks/lenders sell off loans to ___ banks in modern mortgage finance.

,

.

Fill in the Blank

In a Collateralized Debt Obligation (CDO), shares are divided into different pools of risk called ___

Multiple Choice

What is one major problem caused by the incentive to find more mortgages, according to the slide?

• It leads to a shortage of homes.

• It encourages making bad loans.

• It improves credit ratings for everyone.

• It reduces wealth creation.

Multiple Select

Which of the following are examples of large investors who may only invest in very safe securities from highly rated corporations?

• Insurance Companies

• Pension Plans

• Mutual Funds

• Other Retirement Funds

Fill in the Blank

Inflation is measured by finding the annual percentage change in the ___.

Multiple Choice

Based on the inflation rate data from 2010 to 2021, in which year did the United States experience the lowest inflation rate?

• 2013

• 2015

• 2016

• 2020

Multiple Choice

What year had the highest inflation?

• 1997

• 2005

• 1990
• 1998

Multiple Choice

Which of the following is NOT a cause of inflation mentioned in the slides?

• Demand-pull inflation

• Cost-pull inflation

• Wage-price spiral

• Deflation

Multiple Choice

How does inflation impact both creditors and debtors during long inflationary period?

• Inflation increases the real value of debt for debtors, benefiting creditors.
• Both creditors and debtors remain unaffected by inflation during long periods.
• Inflation equally benefits creditors and debtors by stabilizing repayment values.
• Inflation benefits debtors by lowering the real value of their debt, while it harms creditors by decreasing the real value of repayments.

Fill in the Blank

When converted to the value of one US dollar in 2020, one dollar in 1700 was worth approximately ___ times more than it is today.

Multiple Choice

What are the main phases of a business cycle as described in the lesson?

• Recession and Expansion

• Inflation and Deflation

• Growth and Stagnation

• Boom and Bust