Econ 1740 Final Test || with 100% Accurate Solutions.
How did the U.S. finance the first world war? correct answers Increasing taxes (permanent
income tax), printing money, borrowing from the public.
What was the command system? correct answers Gov. used specific system to drive private
investors. Creating incentives for businesses to join.
Was the command system an example of central planning? correct answers No, in central
planning, the gov. sets goals and prices and what not. The US gov. did not force this upon the
companies. They were voluntarily joining this system.
What was the main legacy of the war in terms of the role of government in the economy? correct
answers After the war, many wanted small gov. Public forgets about the large role of gov. when
economy going well, when things aren't going well, they remember they can help.
Why was the 20's called the roaring 20's? correct answers Rapid, strong economic growth.
Production, industrialization, raise in wages, etc.
How did economic growth affect consumer society? With new products and credit? Was income
inequality high or low in this era? correct answers Economic growth was dependent of
consumerism. New products, like affordable cars, washing machines, etc. were driving force of
economic growth. For the first time, mass production was being used. Income inequality was
very high in this era.
How did economic growth shape urbanization in this era? Affect women and minorities?
Emancipation? Gender and racial inequality? correct answers Mass production forced an
increase in urbanization to work in factories. Women started to become part of the labor force.
Still had discrimination. Harlem renaissance was big for blacks joining the urban workforce.
Brought upon emancipation (relatively) for women and minorities.
What were the new consumer products? correct answers Cars, fridges, radios, etc.
What was the importance of consumer credit? correct answers Supported mass consumption,
which was huge for economic growth.
What was the overall political idea in terms of gov's role in the economy? Big or small gov?
correct answers Consensus that the gov. shouldn't have any role, or use monetary, fiscal, or
similar policies. Most believed in small gov. and deregulation.
How did federal gov handle the issue of monopolies? correct answers Gov. was liberal with
handling monopolies, didn't deal with them much.
What were the links between prohibitions and crime? correct answers Rise in crime. Mobs began
to start and get big.
, What were the major changes for the labor force? In terms of real wages, unionization rates,
changes in immigration, and gov. policies in terms of welfare state? correct answers Real wages
increase, unionization rates decreased, for the first time immigration from Europe was limited,
welfare state didn't really start till the new deal.
What were the reasons of economic hardship that farmers experienced in this era? correct
answers Income and economy growing, but food production is growing faster. Food prices went
down. Farmers borrowed excessively. Hurt small and large banks. Fall of liquidity leading to
depression.
How did income inequality and living standards change in this era? correct answers Living
standards increased. Income inequality increased.
What were the major characteristics of macroeconomics policies in this era? Fiscal and monetary
policies? correct answers Can't talk about macroeconomics, because it was not invented, and
gov. did not think they worked. Give moral persuasion to not give risky loans and things like
that.
What were major causes of the great depression? correct answers Income inequality. The rich
invested in the stock market, which drove up the prices. Regular people started to invest and buy
on margin. Banking sector increased bubble by buying stocks themselves. Liquidity dried up.
Banks couldn't give as much credit. To pay loans, people sold stocks, and stock prices started to
decline.
International dimensions? correct answers Panic in France and London. Pulling loans from in
New York.
Absence of macro policies? correct answers Didn't really do anything. Were bystanders, some
thought they should cut spending.
What were the links between stock market and liquidity in the banking system? correct answers
Investing on margin.
Why did the great depression last for a very long time? correct answers Banking system and rest
of financial system collapsed. Credit lines dried up. Consumer spending and investment
collapsed. Unemployment increased. Businesses afraid to produce more, and lay off employees.
Deflation started to take place. Drive firms out of business.
Why bank failures were very common during the great depression? How did these failures affect
the severity of the depression? correct answers Banks didn't have any protection or safety nets.
Whenever there was a rumor, they'd make bank runs and collapse banks. Couldn't borrow from
federal reserve.
What role did the federal reserve and the federal gov play during the depression?
Proactive/reluctant? What were the reasons for their policy choice? correct answers Was not
How did the U.S. finance the first world war? correct answers Increasing taxes (permanent
income tax), printing money, borrowing from the public.
What was the command system? correct answers Gov. used specific system to drive private
investors. Creating incentives for businesses to join.
Was the command system an example of central planning? correct answers No, in central
planning, the gov. sets goals and prices and what not. The US gov. did not force this upon the
companies. They were voluntarily joining this system.
What was the main legacy of the war in terms of the role of government in the economy? correct
answers After the war, many wanted small gov. Public forgets about the large role of gov. when
economy going well, when things aren't going well, they remember they can help.
Why was the 20's called the roaring 20's? correct answers Rapid, strong economic growth.
Production, industrialization, raise in wages, etc.
How did economic growth affect consumer society? With new products and credit? Was income
inequality high or low in this era? correct answers Economic growth was dependent of
consumerism. New products, like affordable cars, washing machines, etc. were driving force of
economic growth. For the first time, mass production was being used. Income inequality was
very high in this era.
How did economic growth shape urbanization in this era? Affect women and minorities?
Emancipation? Gender and racial inequality? correct answers Mass production forced an
increase in urbanization to work in factories. Women started to become part of the labor force.
Still had discrimination. Harlem renaissance was big for blacks joining the urban workforce.
Brought upon emancipation (relatively) for women and minorities.
What were the new consumer products? correct answers Cars, fridges, radios, etc.
What was the importance of consumer credit? correct answers Supported mass consumption,
which was huge for economic growth.
What was the overall political idea in terms of gov's role in the economy? Big or small gov?
correct answers Consensus that the gov. shouldn't have any role, or use monetary, fiscal, or
similar policies. Most believed in small gov. and deregulation.
How did federal gov handle the issue of monopolies? correct answers Gov. was liberal with
handling monopolies, didn't deal with them much.
What were the links between prohibitions and crime? correct answers Rise in crime. Mobs began
to start and get big.
, What were the major changes for the labor force? In terms of real wages, unionization rates,
changes in immigration, and gov. policies in terms of welfare state? correct answers Real wages
increase, unionization rates decreased, for the first time immigration from Europe was limited,
welfare state didn't really start till the new deal.
What were the reasons of economic hardship that farmers experienced in this era? correct
answers Income and economy growing, but food production is growing faster. Food prices went
down. Farmers borrowed excessively. Hurt small and large banks. Fall of liquidity leading to
depression.
How did income inequality and living standards change in this era? correct answers Living
standards increased. Income inequality increased.
What were the major characteristics of macroeconomics policies in this era? Fiscal and monetary
policies? correct answers Can't talk about macroeconomics, because it was not invented, and
gov. did not think they worked. Give moral persuasion to not give risky loans and things like
that.
What were major causes of the great depression? correct answers Income inequality. The rich
invested in the stock market, which drove up the prices. Regular people started to invest and buy
on margin. Banking sector increased bubble by buying stocks themselves. Liquidity dried up.
Banks couldn't give as much credit. To pay loans, people sold stocks, and stock prices started to
decline.
International dimensions? correct answers Panic in France and London. Pulling loans from in
New York.
Absence of macro policies? correct answers Didn't really do anything. Were bystanders, some
thought they should cut spending.
What were the links between stock market and liquidity in the banking system? correct answers
Investing on margin.
Why did the great depression last for a very long time? correct answers Banking system and rest
of financial system collapsed. Credit lines dried up. Consumer spending and investment
collapsed. Unemployment increased. Businesses afraid to produce more, and lay off employees.
Deflation started to take place. Drive firms out of business.
Why bank failures were very common during the great depression? How did these failures affect
the severity of the depression? correct answers Banks didn't have any protection or safety nets.
Whenever there was a rumor, they'd make bank runs and collapse banks. Couldn't borrow from
federal reserve.
What role did the federal reserve and the federal gov play during the depression?
Proactive/reluctant? What were the reasons for their policy choice? correct answers Was not
