Question

Mini-Quiz

1, The efforts to revive the economy in 2009 through 2011 were drawn from?

(A)new tools of monetary policy. (B)the traditional tools of monetary policy. (C)all of the options are correct. (D)discretionary fiscal policy.

2, The elements of the stimulus package adopted in 2009 that allowed states to continue to make their unemployment compensation payments, despite having exhausted their funds, should be considered

(A)non-discretionary fiscal policy. (B)neither discretionary nor nondiscretionary fiscal policy programs. (C)discretionary fiscal policy. (D)monetary policy.

3, Monetary policy designed to counteract a reduction in aggregate demand might include

(A)a reduction in short-term interest rates. (B)a reduction in the money stock. (C)increased government infrastructure spending. (D)an increase in individual income tax rates.

4, The recession of 2007-2009 started

(A)with the financial collapse. (B)rather mildly in late 2007. (C)abruptly in 2007 with higher gasoline prices. (D)in 2006.

5, In the years immediately prior to 2005 in the U.S.,

(A)home prices were constant. (B)bankers were confident that home prices would decrease in 2005. (C)home prices were rising briskly. (D)home prices were falling precipitously.

6, A person using a discount rate, or 0%, is going to consider the concept of sustainability

(A)just a fancy term oil and gas companies use to argue for increased rights to drill. (B)as overly weighting the future. (C)as unwisely focusing on the present. (D)as wise.

7, The fish in the ocean would be considered a

(A)sustainable natural resource. (B)renewable natural resource. (C)limited natural resource. (D)sequestered natural resources.

8, Which issue type of environmental problem is least-easily solved?

(A)One that is entirely confined to a single community. (B)One that is entirely confined to a single property owned by an individual. (C)One that is global. (D)One that is entirely confined to a single country.

Answer 1

1. Ans - c

During great recession, unprecedented monetary policies, better fiscal stratigies and better regulatory practices were unleashed by Federal reserve along with basic traditional tools of monetary policy to stabilise the economy including Repo cut / fed rate cut, open market operations etc.

2. Ans- a

Non discretionary fiscal policy was adopted by the states during the great recession of 2009. Depression means a economic situation wherein there is lower aggregate demand and very low productivity in the economy. At this point, government wants to raise spending and increase circulation of money. For that government / states increase their spending, which is a part of non discretionary fiscal policy. Under non discretionary fiscal policy government social security, welfare of people, and unemployment compensation are included.

Hence all other options are eliminated

3. Ans - a

As the situation says there is a lower aggregate demand, therefore it is clear that people don't have money in their hands. To counter attack this situation means to help increase/boost demand. It is possible by increasing disposible income in the hands of people.

It can be done by reducing interest rates. As interest rates reduce, loan becomes cheaper, thus people can opt for loan at lower rates. It will automatically bosst demand.

other options - increase in tax, reduction of money stock will decrease diposible income of people and will lead to more reduction of demand. Increase in infrastructure spending by government will not directly help to increase demands as it has a lower scope.

4. Ans -a

Recession during 2008 started with the initial subprime mortgage crisis. There was a huge indebtness and financial market collapsed.

All other options are not relevant as it is a factual questions.

5.Ans -c

Commonly termed as housing bubble, which means surge in the prices of houses. During 2005 and later prices of house increased sharply with the increase in interest rates.

All other options are eliminated as it is a factual question relating to historic event of US.

6. Ans -d

Discount rate and sutainability has a coorelation. A person who is in favour of lower discount rate or 0% of it, is said to be in favour of nil or smaller yeild at present. The person considers to look for future benifit rather than present benifits. Thus that person understands the future value , hence supports and underdtands sustainability.

All other options are eliminated as it is a conceptual term.

7. Ans -d

Soil , water, timber, wildlife resources all are termed as sequestered natural resources. Thus fish also comes under this category.

8. Ans - c

A global issue , is a problem that affects the entire world. For example issues related to climate change. It is something which can be encountered with the coordination and multiple efforts by all the nations. It is not in the hands of a specific group. Hence more cooperation is required. Some nations may complicate it more as fighting for climate change may lead to stoppage of certain developmental projects.

However issues relating to a property of individual, or a problem of a community or something related to a country only can be resolved wih ease as it can be dealt within specific boundary due to its limited nature of issues.