Pop Quiz: Economic Depressions

Pop Quiz: Economic Depressions

A. 1910
B. 1897
C. 1823
D. 1797

The combination of a popping land speculation bubble and British deflation crippled the economy in the northern U.S. for three years. The economy in the South, on the other hand, remained active and prosperous.

A. 12
B. 29
C. 47
D. 73

Since the U.S. went off the gold standard in 1933, it has had a lot more flexibility for dealing with economic crises. This has resulted in a slight drop in the number of recessions, but a major reduction in their duration. Before 1933, the average recession lasted for 26 months. Since then, the average has been 11 months -- less than half.

A. A decline in GDP for two consecutive quarters
B. When unemployment hits 10%
C. The time between a 1,000-point fall in the Dow Jones index and when it regains its previous high
D. When a teacher gets annoyed and sends all the kids outside

There is some argument about what, exactly, constitutes a recession. The official answer is a decline in GDP that lasts for two consecutive quarters or more, but some economists also factor in industrial production, unemployment, and other factors. As for the difference between recessions and depressions, there is no clear dividing line -- although an old economists' joke holds that "A recession is when your neighbor loses his job. A depression is when you lose yours."

A. The Great Depression
B. The Panic of 1873
C. The Great Recession
D. The Mass Freakout of 1911

The Panic of 1873, also know as the Long Depression, was caused by a mix of terrible luck and poor planning. Beginning with the failure of one of America's biggest banks, a coinage move that depressed the mining industry and the bursting of a speculation bubble, the ripple effect cause a drop in wages, a series of strikes, and a depression that lasted for over five years.

A. October 28, 1929
B. September 29, 2008
C. October 19, 1987
D. March 12, 2001

On Monday, October 19, 1987, stock markets around the world crashed. The worst hit were the Hong Kong market, which fell by 45.5%, and Australia's, which lost 41.8% of its value. In the U.S., the Dow Jones average fell by 1,738 points, or 22.61%. On the opposite end, the Dow's best one-day percentage growth came on March 15, 1933, when it went up by 15.34%.

A. A sudden loss of electricity in the New York Stock Exchange
B. A sudden 600-point drop in the Dow Jones industrial average
C. A sudden 3% drop in the value of the NASDAQ
D. A sudden streaking episode led by Goldman Sachs's Lloyd Blankfein

At 2:42 PM on May 6, 2010, the stock market fell by 600 points in roughly five minutes. Within twenty minutes, however, most of the loss had been made up.

A. The subprime housing market
B. The dot com bubble
C. The price of oil
D. The start of World War I

Rather than start a recession, the beginning of World War I actually increased U.S. industrial demand, effectively ending the Panic of 1910-1911. However, the end of the war -- and the concomitant dropoff in industrial production -- caused a brief recession.

A. Seven
B. Five
C. Three
D. Zero

America's dependency on oil, combined with its often-problematic relationships with the world's major oil producers, has occasionally been an economic recipe for trouble. The 1973 OPEC oil crisis, the 1979 Iranian revolution and the 1990 oil price shock all sent America's economy into tailspins, contributing to recessions.