In answer to the question, "Could they see the Great Depression coming?", Hughes and Cain (2011) respond:
(a) No—Many people firmly believed that markets would self-correct and eventually recover with no government intervention
(b) No—many people seemed to believe that the prosperity of the 1920s would continue
indefinitely because they believed that the economy was built to sustain high and stable
rates of growth with minimal cyclical fluctuation when markets were permitted to clear themselves without government interference.
(c) Yes—in the late 1920s, a majority of economists reported and publicized that the economy
was becoming dangerously unbalanced and that a serious downturn was near.
(d) Yes and no—by the late 1920s, the economics profession was about equally split on the possibility of a serious downturn in the near future.
(b)
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When a consumer is maximizing total utility,
A) the average utility from each dollar spent is the same. B) total utility cannot be increased by reallocating expenditures among various products. C) the total utility obtainable from each product is at a maximum. D) the marginal utility of the last unit of each product purchased is zero.
The time it takes to overcome the practical and procedural hurdles before the Fed can begin to fix the economy is called the
A) recognition lag. B) implementation lag. C) impact lag. D) liquidity lag.