Question

30. The oil price shocks of the 1970's were said to be caused by:

a. OPEC

b. a loss of worker productivity

c. a decline in the money supply

d. limitations of technology used in oil extraction

31. Keynesian economics may be associated with which of the following:

a. a challenge to laissez-faire doctrine

b. the New Deal

c. the IS/LM model

d. all of the above

32. If the price level increases and workers do not realize this, they will not recognize that:

a. their real wage has risen

b. their real wage has declined

c. their real wage is unaffected

d. none of the above

33. An example of a self-fulfilling bank crisis was:

a. liquidity crisis

b. solvency crisis

c. Stock market crash of 1929

d. Stagflation of the 1970s

34. Who was Marriner S. Eccles?

a. first "real" chairman of the federal reserve

b. a banker from Utah

c. author of the central bank reform legislation in 1934

d. all of the above

35. Keynes compared the formation of business expectations to:

a. a cricket match

b. rational expectations

c. a beauty contest

d. a forecast of the weather

Answer 1

30) Option A. The leading cartel decided to cut back production to increase profits which raised the world price of oil and caused stagflation in the US

31) Option A. It preferred the role of the government in case of recessions and expansions instead of leaving the market economy on its own to thrive.

32) Option B. Workers will believe that the nominal wage and real wage are same since price is not increased but since it is actually increased, real wage has fallen (nominal wage / price level = real wage)

33) Option C

34) Option D

35) Option C