Lecture 21 - Key Terms & Practice Questions

Question 1

Who is this guy? What were his main ideas about how to deal with unemployment in the Great Depression?

Answer 1

• Harry Hopkins
  
  • Employer of last minute
    
    • Civilian Conseration Corps
    • Works Projects Administration (Arts and Writers)

Question 2

In his second inaugural address Franklin Roosevelt said:

Answer 2

“I see one-third of a nation ill-housed, ill-clad, ill-nourished.”

Question 3

Which of the following New Deal agencies put thousands of low-skilled unemployed young men to work?

Answer 3

Civilian Conservation Corps

Question 4

The National Industrial Recovery Act described best as an attempt to restore full employment ___.

Answer 4

by raising prices and wages

Question 5

During the Depression a store could display the blue eagle if it was _____.

Answer 5

charging prices in accord with the National Industrial Recovery Act

Question 6

What was the “sick chicken case” all about?

Answer 6

The indictment included charges that Schechter Poultry had failed to observe the Minimum Wage and maximum hour provisions applicable to workers and that it had violated a provision of the Live Poultry Code prohibiting the sale of unfit chickens. The case became popularly known as the Sick Chicken case.

Question 7

What did Ben Bernanke say to Milton Friedman at Friedman’s 90th birthday party?

Answer 7

You are right, the Federal Reserve caused the Great Depression, but thanks to you we will not do it again.

Question 8

How would a doctrinaire Keynesian explain the failure of Federal government deficits to lift the country out of the Great Depression between 1929 and 1939?

Answer 8

only persistent and growing federal deficits could maintain full employment

Question 9

Walter Bagehot published his famous book, Lombard Street, in 1873. What, if anything does it have to do with the Great Depression?

Answer 9

• “in time of panic it [the Bank of England] must advance [lend money] freely and vigorously to the public out of the reserve.”
  
  • The Fed could’ve prevented the severity of the Great Depression.

Question 10

Keynes vs. Pigou, should we cut wages and prices?

Answer 10

• No, only causes further downward spiral of wages and prices.
  
  • Real wages = wages/prices so cutting would keep real wages the same
  • must increase demand for employment.