Los Angeles Valley College » Economics » Econ 010 - Economic History of the United States » Fall 2021

Econ 010 - Economic History of the United States » Fall 2021 » Homework 7

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Question #1

Consider the following situation. Today, many people believe that we have several companies that are so big because each of these companies is a monopoly in their own market. Also, many believe these companies use their market power in a way that harms consumers. Such a situation has existed before in the US.

A. TRUE

B. FALSE

Question #2

Which of the following could be said about economies of scale?

A. It is not in any way related to continuous flow production

B. It causes the cost per unit of goods to decrease

C. It persuaded the courts to do away with all monopolies at the end of the 19th century

D. It can explain at least partly why US firms decreased in size

E. It is just another word for trusts

Question #3

Which of the following is FALSE concerning the Sherman Antitrust Act?

A. The Act was partly due to the rise of large corporations like Standard Oil

B. The Act resulted in a crackdown on many monopolies as it was strictly interpreted and enforced without exception by the Courts

C. The Act said it would punish those who monopolized any part of the trade or commerce among several states

D. The Act was in part supported and pushed by suppliers in the economy’s agricultural sector

E. The Act had to be interpreted by the Courts

Question #4

Which of the following is a possible effect of a country’s government trying to decrease its price level – that is, create deflation?

A. It would cause a decline in the purchasing power of a given loan

B. It would lead to stricter versions of double liability

C. It would lead to the government overprinting their country’s currency

D. It can result in increased unemployment

E. It would benefit borrowers

Question #5

According to the lecture slides, why did the Federal Reserve form?

A. To try to prevent bank panics

B. To follow the demands of Coxey’s Army

C. To stop investment banking

D. To follow what was suggested in the novel “The Wizard of Oz”

E. To copy Canada's banking system

Question #6

Which of the following was NOT an economic effect on the US from World War 1?

A. Economic gains in terms of increased exports to Europe

B. The switch from the US being a command economy before World War 1 to a market economy during World War 1

C. New taxes

D. High inflation

E. Increased economic opportunities for African Americans

Question #7

Why was there a huge number of strikes in the year 1917?

A. The nominal wage had not increased

B. The real wages fell that year

C. The success of the strike in the steel industry the year before

D. The wages of soldiers at the time were much higher than the market wage

E. The unemployment rate was at levels near the Great Depression

Question #8

The fact that the government got involved in fighting the Great Depression was a mystery. What was a further mystery is why people supported this government intervention. After all, there was no historical example in the US of the government getting involved in the economy and the public deciding that such an intervention was beneficial.

A. TRUE

B. FALSE

Question #9

Which of the following does NOT accurately describe the Great Depression?

A. It was worsened because of political infighting within the Federal Reserve

B. It was in part caused by the loss of confidence in the country’s banking system

C. It was worsened because President Herbert Hoover’s devotion to free markets meant he did nothing to combat the Depression

D. It was a much longer period of economic downturn than previous recessions and depressions

E. It helped lead to Deposit Insurance which put a stop to bank panics

Question #10

Suppose we had the following information for the country of Olena-ville run by President O. Bushovska. 2017 2018 2019 2020 Nominal interest rate 4.50 3.00 2.25 2.00 Inflation rate -3.00 -5.50 -7.50 -11.50 Unemployment rate 12% 15% 20% 25% Based on what you learned about the Great Depression, which of the following could you conclude from these numbers?

A. The economy is experiencing a rapid rise in the prices of all goods and services

B. Monetary policy cannot be used to help fix the economy as the interest rate is already so low

C. The Bushovska Administration should do away with deposit insurance as soon as possible

D. The economy is going great and should carry on without changing any policies at all

E. None of the above

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