Question

QUESTION 50

1. The 1980-82 recession was caused by

   		fiscal policy
   		tariffs
   		monetary policy
   		finanical crisis

1 points   

QUESTION 51

1. Changes in the price level affect which components of aggregate demand?

   	a.	only consumption and investment
   	b.	consumption, investment, and net exports
   	c.	only consumption and net exports
   	d.	only investment

Answer 1

50. Option C.

• The 1980-82 recession was the most severe economic downturn after the Great Depression.
• It started with an unemployment rate of about 7% to 8% in 1980's but rose very rapidly by the start of 1982.
• The recession also lead to higher inflationary pressure within the nation.
• This recession was mainly caused by a tight monetary policy enacted by the Fed to fight inflationary pressures.

51. Option B.

• Changes in price level affects investment, consumption and net exports.
• When the price level falls, the quantity of consumption, next exports, and the quantity of investment all increases.