America's Great Depression Chapter 3
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The _________ principle is how underconsumptionists try toexplain the problem of greater fluctuation in the producers’ thanthe consumer goods’ industries.
This is a 10-question quiz on Chapter 3: Some Alternative Explanations of Depression: A Critique from America's Great Depression by Murray Rothbard.
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- 2.
What essential determinant of savings and investment does Hansen's stagnation theory omit?
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Interest rates
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Money supply
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Time preferences
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Wage rates
Correct Answer
A. Time preferences -
- 3.
Why does Rothbard reject the notion that consumer confidence is a cause of business cycles?
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It is derivative, not causal.
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Consumption is only one part of GDP.
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Business confidence is the actual cause.
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He does not believe in psychology.
Correct Answer
A. It is derivative, not causal. -
- 4.
What is the fundamental flaw in blaming the current crisis on the housing market?
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The housing crisis was caused by the Democrats.
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Overproduction is caused by the construction industry.
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It confuses a business fluctuation with the business cycle.
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Housing is an investment good, not a consumer good.
Correct Answer
A. It confuses a business fluctuation with the business cycle. -
- 5.
How many separate but interacting economic cycles does Schumpeter postulate?
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Zero
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One
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Two
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Three
Correct Answer
A. Three -
- 6.
Which of the following are not a common explanation of depression as set forth by Rothbard.
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Overproduction
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Underproduction
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Underconsumption
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Dearth of Investment opportunities
Correct Answer
A. Underproduction -
- 7.
What is the contraction-causing factor that logic dictates lies beneath overproduction theory and which the theory cannot explain?
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Aggregate demand
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Variable interest rates
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Cost-price differentials
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Consumer good inflation
Correct Answer
A. Cost-price differentials -
- 8.
Which of the following is not a potential explanation for an underconsumption scenario?
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Too high a proportion of income going to lower income groups
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Too much investment
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Too much production
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Too high a proportion of income going to upper income groups
Correct Answer
A. Too high a proportion of income going to lower income groups -
- 9.
Why does Rothbard consider consumer loans to be less problematic than other forms of loans?
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They are smaller in the aggregate than business financing.
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They do not create a boom-bust cycle.
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They will evaporate when consumers go bankrupt.
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They increase consumer spending and therefore economic growth.
Correct Answer
A. They do not create a boom-bust cycle. -
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