ECN 211 MIDTERM 3 TEST PREP – ASU QUESTIONS AND CORRECT ANSWERS

ECN 211 MIDTERM 3 TEST PREP –
ASU QUESTIONS AND CORRECT
ANSWERS
TheA2GreatA2DepressionA2startedA2withA2aA2fallA2inA2consumerA2confidenceA2becauseA2of
a.A2AA2stockA2marketA2crash
b.A2WorldA2WarA2II
c.A2AA2housingA2bubbleA2bursting
d.A2RichardA2NixonA2-A2Ans--a.A2AA2stockA2marketA2crash

AA2largeA2numberA2ofA2banksA2failedA2inA2theA2USA2duringA2theA2GreatA2DepressionA2beca
use
a.A2TheA2governmentA2spentA2moneyA2onA2theA2NewA2Deal
b.A2TheA2governmentA2defaultedA2onA2itsA2debtA2fromA2WorldA2WarA2II.
c.A2AA2seriesA2ofA2bankA2runsA2inA21931A2andA21932A2forcedA2themA2toA2close
d.A2ConsumersA2panickedA2andA2transferredA2theirA2moneyA2fromA2theA2stockA2marketA2to
A2banksA2-A2Ans--
c.A2AA2seriesA2ofA2bankA2runsA2inA21931A2andA21932A2forcedA2themA2toA2close

WhichA2ofA2theA2followingA2wasA2notA2aA2policyA2mistakeA2duringA2theA2GreatA2Depression
?
a.A2FederalA2ReserveA2raisingA2interestA2rates
b.A2USA2FederalA2GovernmentA2balancingA2theA2budget
c.A2FDRA2takingA2theA2USA2offA2theA2GoldA2Standard
d.A2FederalA2ReserveA2notA2actingA2asA2lenderA2ofA2lastA2resortA2-A2Ans--
c.A2FDRA2takingA2theA2USA2offA2theA2GoldA2Standard

WhatA2shouldA2haveA2beenA2doneA2toA2preventA2aA2panicA2inA2theA2bankingA2sectorA2durin
gA2theA2GreatA2Depression?
a.A2USA2workersA2shouldA2haveA2beenA2encouragedA2toA2stayA2inA2theirA2jobs
b.A2TheA2FederalA2GovernmentA2shouldA2haveA2increasedA2taxes
c.A2FDRA2shouldA2haveA2stayedA2onA2theA2GoldA2Standard
d.A2TheA2FederalA2ReserveA2shouldA2haveA2loweredA2theA2FedA2FundsA2rateA2andA2lentA2
banksA2cashA2-A2Ans--
d.A2TheA2FederalA2ReserveA2shouldA2haveA2loweredA2theA2FedA2FundsA2rateA2andA2lentA2
banksA2cash

AA2mortgageA2backedA2securityA2is....
a.A2AnA2assetA2consistingA2ofA2mortgagesA2fromA2manyA2locationsA2thatA2investorsA2canA2
buyA2sharesA2in
b.A2AA2liabilityA2thatA2banksA2boughtA2toA2increaseA2theirA2reserveA2ratio
c.A2AA2collectionA2ofA2governmentA2debt-backedA2assets

, d.A2AA2loanA2consumersA2takeA2outA2whenA2theyA2purchaseA2aA2homeA2-A2Ans--
a.A2AnA2assetA2consistingA2ofA2mortgagesA2fromA2manyA2locationsA2thatA2investorsA2canA2
buyA2sharesA2in

DuringA2theA2GreatA2Recession,A2whichA2ofA2theA2followingA2didA2notA2contributeA2toA2theA
2fallA2inA2GDP?
a.A2DecliningA2consumerA2confidence
b.A2TheA2failureA2ofA2banks,A2particularlyA2LehmanA2Brothers
c.A2RisingA2governmentA2debt
d.A2AA2decreaseA2inA2newA2residentialA2housingA2constructionA2-A2Ans--
c.A2RisingA2governmentA2debt

TheA2TroubledA2AssetA2ReliefA2Program
a.A2SocializedA2theA2USA2bankingA2sectorA2byA2nationalizingA2allA2theA2banks
b.A2ProvidedA2capitalA2toA2banksA2toA2rebuildA2theirA2balanceA2sheets
c.A2UsedA2taxpayerA2moneyA2toA2buyA2toxicA2assetsA2fromA2banks
d.A2IsA2RussianA2mobsterA2speakA2forA2purchasingA2failingA2FloridaA2realA2estateA2-A2Ans--
b.A2ProvidedA2capitalA2toA2banksA2toA2rebuildA2theirA2balanceA2sheets

WhichA2ofA2theA2followingA2isA2NOTA2aA2reasonA2theA2recoveryA2fromA2theA2GreatA2Reces
sionA2wasA2notA2faster?
a.A2TheA2fiscalA2stimulusA2wasA2notA2largerA2enough
b.A2TheA2FederalA2ReserveA2hitA2theA2zeroA2lowerA2bound
c.A2ConsumersA2neededA2timeA2toA2deleverage
d.A2ExcessiveA2regulationA2afterA2theA2GreatA2RecessionA2-A2Ans--
d.A2ExcessiveA2regulationA2afterA2theA2GreatA2Recession

PeripheryA2EuroA2countriesA2likeA2Spain,A2IrelandA2andA2GreeceA2allA2experiencedA2whatA
2crisisA2afterA2theA2GreatA2Recession?
a.A2GovernmentA2debtA2crisis
b.A2CurrencyA2crisis
c.A2NaturalA2disasters
d.A2K-popA2-A2Ans--a.A2GovernmentA2debtA2crisis

PriorA2toA2theA2GreatA2Recession,A2theA2peripheryA2EuroA2countriesA2experiencedA2largeA
2currentA2accountA2deficits,A2whereA2___A2wasA2greaterA2thanA2___.A2___A2wasA2greaterA2
thanA2___.
a.A2Investment;A2savings;A2production;A2consumption
b.A2Investment;A2savings;A2consumption;A2production
c.A2Savings;A2investment;A2production;A2consumption
d.A2Savings;A2investment;A2consumption;A2productionA2-A2Ans--
b.A2Investment;A2savings;A2consumption;A2production

OneA2structuralA2flawA2inA2theA2designA2ofA2theA2EuroA2was
a.A2ItA2wasA2fixedA2toA2theA2dollar
b.A2ItA2underestimatedA2laborA2flows