Lesson 6 — The Economics of Booms and Busts  ("Boom-bust...")

1. Since the Great Depression of the 1930s 
 
a. the boom/bust cycle has been reduced, but not eliminated.
b. economic cycles have been the result of government manipulation.
c. very little has changed in terms of economic cycles.
d. globalization has reduced the risk of depression in the United States.

2. Land speculation tends to cause     ("Boom-bust...")

a. postponement of new construction.
b. underbuilding and overbuilding in the same areas.
c. instability in the banking system.
d. all of the above
e. a & b, but not c.

3. What will be the eventual result of the tendency for land rent to grow proportionally as the economy's output increases? (Chp. 22)

4. When too much of a particular commodity is produced,    (Chp. 22)

a. speculators will buy up the increase, expecting higher prices.
c. the value of land falls.
d. other goods will also be over-produced, in a chain reaction.
e. its price falls and people have more to spend on other goods.

5. What facts show us that recessions cannot be caused by general overproduction or overconsumption? (Chp. 22)

6. What three processes contribute to restoring production after a period of recession or depression? Must these processes function concurrently? (Chp. 22)

7. Discuss the relationship between land speculation and the banking and finance industries. ("Boom-bust...")

8. One way to hold off the recessionary effect of rising speculative land prices is ("Boom-bust...")

a. to abolish the minimum wage.
b. to remove import duties.
c. to cut taxes.
d. to increase the money supply.
e. to establish rent controls.

9. Why is full employment considered to be impossible in a modern economy? ("Boom-bust...")

10. If interest rates are lowered in an attempt to avoid an economic slowdown ("Boom-bust")

a. land prices will tend to increase.
b. people will try to refinance their mortgages at lower rates.
c. there will be renewed danger of inflation.
d. all of the above
e. b & c, but not a

11. The expectation of future increase in land value ("Boom-bust...")

a. reduces the supply of affordable housing.
b. plays a role in every economic decision in our society.
c. is a component of the selling price of land.
d. is often innaccurate.
e. All of the above.
f. a, b and d, but not c.

12. How does the problem of the boom/bust cycle relate to the general problem of poverty? (Chp. 23)