Question

1. Which of the following recessionary periods was not caused by an AD shock

   		Great Depression
   		1973-75 recession
   		1981-82 recession
   		Great Recession

2. During the Great Depression, the economy experienced

   		inflation
   		disinflation
   		deflation
   		hyper-inflation

3. During the Great Depression, output growth

   		increased at a slower than normal rate
   		was negative for 4 quarters before turning positive
   		was negative for 4 years before turning positive
   		didn't decline as much as during the Great Recession

4. While there is no "standard" for distinguishing an economic depression from a recession, in general economists would look at the magnitude of which of the following

   		real GDP decline
   		unemployment increase
   		both of the above
   		only real GDP declines

Answer 1

Answer to question 1 is option b) 1973-75 recession

This is because , 1973-75 recession was caused by OPEC's raising oil prises which caused aggregate supply to shift.

Answer to question 2 is option c) deflation

This is because , Deflation is the economic term used to describe the drop in prices for goods and services. Deflation slows down economic growth. It normally takes place during times of economic uncertainty when there is demand for goods and services is lower, along with higher levels of unemployment , whereas , Disinflation occurs when price inflation slows down temporarily. Unlike inflation and deflation, disinflation is the change in the rate of inflation.

Answer to question 3 is option c) was negative for 4 years before turning positive

Answer to question 4 is option c) both of the above