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The Great Depression was a global economic downturn that lasted roughly from 1929 to 1939.
Answer: True
The Great Depression was indeed a severe worldwide economic downturn, generally dated from 1929 to 1939, characterized by widespread unemployment and economic contraction.
The Roaring Twenties, which preceded the Great Depression, was characterized by widespread economic stagnation and minimal industrial growth.
Answer: False
The Roaring Twenties, preceding the Great Depression, was marked by significant economic expansion, industrial growth, and technological innovation, rather than stagnation.
The Wall Street Crash of 1929 is widely considered the event that initiated the Great Depression, causing a significant drop in the Dow Jones Industrial Average.
Answer: True
The Wall Street Crash of October 1929 is widely recognized as the primary trigger for the Great Depression, leading to a precipitous decline in stock market values.
During the first half of 1930, consumer spending increased significantly while business investment decreased compared to 1929.
Answer: False
In the first half of 1930, consumer spending actually decreased by approximately 10% compared to 1929, while business investment also declined due to economic uncertainty.
The term "Great Depression" was coined by President Herbert Hoover to describe the economic crisis.
Answer: False
While President Hoover did use the term, it is generally attributed to British economist Lionel Robbins, who used it in his 1934 book. The term itself had earlier origins.
What was the primary characteristic of the Great Depression?
Answer: A severe worldwide economic downturn marked by widespread unemployment and poverty.
The Great Depression was fundamentally characterized by a profound and prolonged global economic contraction, leading to mass unemployment, poverty, and business failures.
What economic period preceded the Great Depression and was known for significant industrial growth and speculation?
Answer: The Roaring Twenties
The decade preceding the Great Depression, known as the Roaring Twenties, was characterized by substantial industrial expansion, technological advancements, and speculative investment.
What event is commonly identified as the beginning of the Great Depression?
Answer: The Wall Street crash of 1929
The Wall Street Crash of 1929 is widely regarded as the pivotal event that initiated the Great Depression, triggering a cascade of economic failures.
How did consumer spending change in the first half of 1930 compared to the same period in 1929?
Answer: Consumers cut expenditures by about 10%.
Consumer spending experienced a reduction of approximately 10% in the first half of 1930 when compared to the same period in the preceding year.
The Smoot-Hawley Tariff Act of 1930, intended to protect American industries, ultimately led to a collapse in global trade due to retaliatory tariffs.
Answer: True
The Smoot-Hawley Tariff Act significantly raised U.S. tariffs, provoking retaliatory measures from other countries and contributing to a sharp decline in international trade.
President Hoover's administration approved the Federal Home Loan Bank Act in 1932 to encourage home construction and reduce foreclosures.
Answer: True
The Federal Home Loan Bank Act was indeed passed in 1932 under President Hoover's administration with the aim of supporting home construction and mitigating foreclosures.
The Turkish government responded to the economic challenges of the Great Depression by adopting more liberal economic policies and reducing state intervention.
Answer: False
Turkey, facing economic challenges from the Depression, moved towards more statist policies, increasing state intervention rather than adopting more liberal economic approaches.
The National Recovery Administration (NRA) aimed to combat deflation by encouraging businesses to lower prices and wages to stimulate demand.
Answer: False
The NRA aimed to combat deflation and unfair competition by establishing industry codes that set minimum prices and wages, rather than encouraging lower prices and wages.
The Reconstruction Finance Corporation (RFC) was established to provide direct financial relief to unemployed individuals.
Answer: False
The RFC was established in 1932 to provide financial assistance to banks, railroads, and other financial institutions, not for direct relief to individuals.
What was the primary consequence of the Smoot-Hawley Tariff Act of 1930?
Answer: It led to retaliatory tariffs from other nations, causing a collapse in global trade.
The Smoot-Hawley Tariff Act's protectionist measures prompted retaliatory tariffs from other countries, resulting in a severe contraction of global trade.
Which of the following was a measure approved by the Hoover administration in 1932 to address the economic crisis?
Answer: The Federal Home Loan Bank Act.
The Federal Home Loan Bank Act was enacted in 1932 under President Hoover's administration to stimulate home construction and reduce foreclosures.
Japan's economic recovery from the Great Depression was aided by policies implemented by which finance minister?
Answer: Takahashi Korekiyo
Finance Minister Takahashi Korekiyo implemented early Keynesian-style fiscal stimulus policies in Japan, which helped facilitate the nation's economic recovery from the Great Depression.
What strategy did many Latin American governments adopt during the Great Depression to insulate their economies?
Answer: Developing local industries through protectionist policies and government intervention.
Many Latin American governments pursued import substitution industrialization, fostering domestic industries through protectionist measures and state intervention to reduce reliance on volatile international markets.
What was the role of the Reconstruction Finance Corporation (RFC) established in 1932?
Answer: To lend money to banks and financial institutions to rescue them.
The Reconstruction Finance Corporation (RFC) was created in 1932 to provide loans to banks, railroads, and other financial institutions, aiming to stabilize the economy.
Which New Deal program aimed to stabilize the banking system?
Answer: Emergency Banking Act
The Emergency Banking Act, passed shortly after President Roosevelt took office, was designed to stabilize the nation's banking system by allowing sound banks to reopen under government supervision.
Countries that remained on the gold standard during the Depression generally recovered faster due to their ability to adjust monetary policy freely.
Answer: False
Countries that abandoned the gold standard earlier generally recovered faster, as it allowed them greater flexibility in monetary policy and improved their balance of payments, unlike those constrained by the gold standard.
The gold standard facilitated the global spread of the Depression by forcing countries losing gold to adopt expansionary monetary policies.
Answer: False
The gold standard facilitated the spread of the Depression by forcing countries experiencing gold outflows to adopt *contractionary* monetary policies (e.g., raising interest rates) to protect their reserves, thus deepening the downturn.
The United Kingdom was the last major European power to abandon the gold standard during the Great Depression.
Answer: False
The United Kingdom was the first major European power to abandon the gold standard, doing so in September 1931.
The collapse of the Credit Anstalt in mid-1931 had minimal impact on the German economy.
Answer: False
The collapse of Austria's Credit Anstalt in mid-1931 had a significant negative impact on the German economy, triggering a financial crisis and exacerbating existing economic problems.
Colonial economies in Africa and Asia were largely unaffected by the Great Depression due to their limited integration with global markets.
Answer: False
Colonial economies in Africa and Asia were severely impacted by the Great Depression due to their reliance on commodity exports, which experienced sharp price declines and reduced demand.
Industrial areas in the north of Britain suffered more severely from the Great Depression than the southern regions.
Answer: True
The industrial regions of Northern Britain were disproportionately affected by the Great Depression, experiencing severe unemployment, while Southern England fared relatively better.
The Soviet Union's centrally planned economy made it highly vulnerable to the economic downturns experienced by capitalist nations during the Great Depression.
Answer: False
The Soviet Union's centrally planned economy, being largely insulated from global capitalist markets, was not significantly vulnerable to the economic downturns of the Great Depression.
Poland experienced only minor disruptions to its industrial production during the Great Depression.
Answer: False
Poland's industrial production was significantly disrupted by the Great Depression, with notable declines in sectors like coal and steel.
Puerto Rico's economy was relatively resilient to the Great Depression due to its diversified agricultural exports.
Answer: False
Puerto Rico's economy was severely impacted by the Great Depression, primarily due to declining demand for its main exports, sugar and coffee.
Chile was considered the hardest-hit country during the Great Depression by the League of Nations due to its reliance on copper and nitrate exports.
Answer: True
The League of Nations identified Chile as one of the countries most severely affected by the Great Depression, largely because its economy was heavily dependent on the export of copper and nitrates.
France's economic self-sufficiency provided it with significant insulation from the effects of the Great Depression compared to other European nations.
Answer: True
France experienced a less severe impact from the Great Depression compared to many other European nations, partly due to its relatively greater economic self-sufficiency and less integrated financial system.
According to the source, which factor reliably predicted a country's economic recovery from the Great Depression?
Answer: The earliness with which a country abandoned the gold standard.
Later economic analyses suggest that the speed of a country's recovery from the Great Depression was reliably correlated with how early it abandoned the gold standard.
How did the gold standard contribute to the global spread of the Great Depression?
Answer: By forcing countries losing gold to adopt deflationary policies, contracting their economies.
The gold standard's rigidity compelled countries experiencing gold outflows to implement contractionary monetary policies, thereby exacerbating the economic downturn and facilitating its global transmission.
Which country was the first major currency power to leave the gold standard during the Great Depression?
Answer: United Kingdom
The United Kingdom was the first major currency power to depart from the gold standard during the Great Depression, doing so in September 1931.
What was the impact of the Credit Anstalt's collapse in mid-1931?
Answer: It triggered a severe financial crisis and pressured the German economy.
The failure of the Credit Anstalt in Austria precipitated a significant financial crisis that adversely affected the German economy, intensifying its existing vulnerabilities.
How did the Great Depression affect colonial economies in Africa and Asia?
Answer: They were severely impacted by falling commodity prices and declining exports.
Colonial economies in Africa and Asia suffered greatly due to the collapse in global demand and prices for their primary commodity exports, leading to widespread economic hardship.
Which country was labeled the hardest-hit during the Great Depression by the League of Nations?
Answer: Chile
The League of Nations identified Chile as one of the countries most severely affected by the Great Depression, primarily due to its heavy reliance on the export of copper and nitrates.
What factor largely insulated China from the initial effects of the Great Depression?
Answer: Its adherence to the Silver standard.
China's adherence to the Silver standard, rather than the gold standard, provided a degree of insulation from the initial global economic shocks of the Great Depression.
How did the Great Depression impact Poland's industrial production?
Answer: Hard coal production decreased by 27%, and steel production by 61%.
Poland's industrial sector was severely affected, with significant declines such as a 27% drop in hard coal production and a 61% fall in steel production between 1928 and 1932.
What was the primary impact of the Great Depression on Puerto Rico's economy?
Answer: Severe impact due to declining demand for sugar and coffee, leading to high unemployment.
Puerto Rico's economy suffered severely during the Great Depression, primarily due to a sharp decline in demand for its key exports, sugar and coffee, which resulted in widespread unemployment and economic hardship.
What was the main impact of the Great Depression on the economy of Chile?
Answer: It severely impacted the economy due to reliance on copper and nitrate exports.
Chile's economy was profoundly affected by the Great Depression, primarily because of its heavy dependence on the export of copper and nitrates, commodities that experienced a drastic reduction in global demand and prices.
Monetarist economists, like Friedman and Schwartz, argued that the Federal Reserve's aggressive expansion of the money supply worsened the Depression.
Answer: False
Monetarist economists, such as Friedman and Schwartz, argued that the Federal Reserve's *failure to expand* the money supply and provide liquidity, rather than an aggressive expansion, worsened the Depression.
John Maynard Keynes believed that the private sector alone was sufficient to restore full employment during economic crises.
Answer: False
John Maynard Keynes argued that government intervention, through deficit spending and fiscal stimulus, was necessary to restore full employment, as the private sector alone was insufficient during crises.
Milton Friedman and Anna Schwartz identified the "Great Contraction" as a period where the money supply significantly increased, boosting economic activity.
Answer: False
Friedman and Schwartz described the "Great Contraction" as a period of significant *decrease* in the money supply, which they argued was a primary cause of the Depression's severity.
The expectations hypothesis suggests that recovery from the Great Depression was primarily driven by a decrease in consumer confidence and investment.
Answer: False
The expectations hypothesis posits that recovery was driven by a *change* in expectations, specifically towards inflation and economic expansion, fostered by policy shifts, which in turn boosted confidence and investment.
The Austrian School of economics primarily attributed the Great Depression to a decline in aggregate demand caused by decreased consumer spending.
Answer: False
The Austrian School primarily attributed the Great Depression to the Federal Reserve's expansionary monetary policy in the 1920s, which led to malinvestment and an inevitable bust, rather than a decline in aggregate demand.
The "liquidationist" position advocated for government intervention to prop up failing businesses during the Depression.
Answer: False
The "liquidationist" position, often associated with the Austrian School, advocated for allowing market forces to liquidate failing businesses, believing this would clear the way for recovery, rather than propping them up.
According to Monetarist views, what was the primary failure of the Federal Reserve during the Great Depression?
Answer: It failed to act decisively and expand the money supply or provide liquidity.
Monetarists contend that the Federal Reserve's critical failure was its inaction, specifically its inability or unwillingness to expand the money supply and provide essential liquidity to the banking system.
John Maynard Keynes advocated for which type of government action during economic crises?
Answer: Government intervention through deficit spending and tax cuts to stimulate demand.
Keynes advocated for active government intervention, including deficit spending and tax reductions, to boost aggregate demand and restore full employment during economic downturns.
According to the Austrian School, what was the primary cause of the Great Depression?
Answer: The Federal Reserve's expansion of the money supply in the 1920s, leading to a credit boom.
The Austrian School posits that the Great Depression stemmed from the Federal Reserve's inflationary monetary policies in the 1920s, which artificially stimulated investment and created an unsustainable credit bubble.
What was the main argument of the "liquidationist" economic position during the Depression?
Answer: The market should be allowed to liquidate failed businesses to free up resources.
Liquidationists argued that the most effective way to recover from a depression was to permit the natural market process of liquidating insolvent businesses and assets, thereby clearing the way for more efficient resource allocation.
According to Irving Fisher's analysis, what was a key factor driving the Great Depression?
Answer: A cycle of deflation and increasing over-indebtedness.
Irving Fisher identified a vicious cycle of deflation and mounting over-indebtedness as a principal driver of the Great Depression, where falling prices increased the real burden of debt.
What economic theory emphasizes reduced consumption and investment as the primary cause of the Great Depression?
Answer: Keynesian theory
Keynesian economics identifies a decline in aggregate demand, stemming from reduced consumption and investment, as the principal driver of economic downturns like the Great Depression.
The Great Depression led to a decrease in political extremism and a strengthening of democratic institutions in Germany.
Answer: False
Conversely, the Great Depression significantly fueled political extremism in Germany, contributing to the rise of Adolf Hitler and the Nazi Party, and destabilizing democratic institutions.
During the Great Depression, women's roles in household economics became less demanding as families had more disposable income.
Answer: False
Women's household roles became more demanding during the Great Depression due to reduced family incomes, requiring greater resourcefulness in managing finances and necessities.
Shantytowns built by the homeless during the Great Depression were commonly referred to as "Rooseveltvilles."
Answer: False
Shantytowns for the homeless during the Great Depression were commonly known as "Hoovervilles," named derisively after President Herbert Hoover.
The Great Depression led to a greater acceptance of government intervention and social welfare programs in Europe after World War II.
Answer: True
The economic failures experienced during the Great Depression contributed to a widespread shift in European thought, leading to greater acceptance of government intervention and the development of social welfare states after World War II.
During the Great Depression, women in the labor force were less likely to be laid off from manufacturing jobs than from white-collar positions.
Answer: False
Women were often concentrated in light manufacturing and were more likely to face layoffs in these sectors, and societal pressures also led to women leaving jobs if their husbands were employed.
How did the Great Depression contribute to political changes in Germany?
Answer: It fueled political extremism, contributing to the rise of Adolf Hitler and the Nazi Party.
The severe economic hardship caused by the Great Depression in Germany created fertile ground for political extremism, significantly contributing to the rise of the Nazi Party and Adolf Hitler.
What was the impact of the Great Depression on women's household roles?
Answer: Women's roles became more challenging as they managed reduced incomes more carefully.
The Great Depression intensified the demands on women in household management, as they had to carefully stretch reduced incomes and resources.
What does the term "Hooverville" refer to?
Answer: Shantytowns built by the homeless during the Great Depression.
"Hooverville" was a derogatory term used to describe the shantytowns that emerged across the United States, housing those made homeless by the Great Depression.
How did the Great Depression influence post-World War II economic policies in Europe?
Answer: It contributed to the adoption of social democracy and planned economies.
The perceived failures of market economies during the Great Depression led many European nations to embrace social democracy and more interventionist economic policies in the post-World War II era.
How did the Great Depression affect women in the labor force?
Answer: Layoffs were less common in white-collar jobs but concentrated in light manufacturing.
Women in white-collar positions were generally less likely to be laid off than those in light manufacturing. Societal pressures also influenced employment, with some families limiting jobs to one per household if possible.
Which of the following literary works is set during the Great Depression?
Answer: "To Kill a Mockingbird"
Harper Lee's novel "To Kill a Mockingbird" is famously set during the Great Depression, capturing the social and economic atmosphere of the era.
Most countries began their economic recovery from the Great Depression around 1933, although the recovery speed varied.
Answer: True
Economic recovery commenced in most nations around 1933, though the pace and extent of this recovery differed considerably among countries.
World War II significantly worsened the economic conditions of the Great Depression by diverting resources.
Answer: False
World War II is widely credited with effectively ending the Great Depression by stimulating industrial production and employment through massive government spending and mobilization.
Which factor is credited with effectively ending the Great Depression?
Answer: The outbreak of World War II.
While New Deal programs provided relief and some recovery, the massive government spending and industrial mobilization associated with World War II are widely credited with definitively ending the Great Depression.
What was the consensus view among economists regarding the New Deal's role in U.S. recovery?
Answer: The New Deal policies either caused or accelerated the economic recovery.
The prevailing consensus among economists is that the New Deal programs implemented by President Roosevelt either initiated or hastened the economic recovery process in the United States during the 1930s.
How did the expectations hypothesis suggest recovery occurred?
Answer: By fostering expectations of inflation and economic expansion through policy changes.
The expectations hypothesis suggests that recovery was significantly driven by policy shifts that altered public expectations, fostering confidence in future economic expansion and inflation, which in turn stimulated investment and consumption.
What was the general timeline for economic recovery from the Great Depression in most countries?
Answer: Recovery started around 1933 but varied by nation.
Most countries began to experience economic recovery from the Great Depression around 1933, although the pace and extent of this recovery differed significantly from one nation to another.