The Creature from Jekyll Island: A Second Look at the Federal Reserve Quiz | Eight Week Quiz A

G. Edward Griffin
This set of Lesson Plans consists of approximately 218 pages of tests, essay questions, lessons, and other teaching materials.
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This quiz consists of 5 multiple choice and 5 short answer questions through Section I. What Creature Is This? Chapter 2 The Name of the Game Is Bailout.

Multiple Choice Questions

1. Why did banks make risky loans?
(a) The banks had incentive in terms of high profits for granting mortgages to home buyers who would not be able to pay the loans off, but who might be able to make interest payments.
(b) The US Congress passed legislation that required banks to make ten percent of their loans to risky borrowers.
(c) Banks did not thoroughly check out the risk factor of some borrowers.
(d) Banks are required by the Federal Reserve to make a certain percentage of risky loans.

2. What was the main cause of the economic meltdown in 2008?
(a) The lack of Congressional legislation was the main cause for the 2008 economic meltdown.
(b) An unstable world economy was the main cause for the 2008 economic meltdown.
(c) The US deficit was the main cause for the 2008 economic meltdown.
(d) Toxic assets, also known as mortgages and loans were the main cause for the 2008 economic meltdown.

3. What happens when the Federal Reserve System prints new money?
(a) When the Federal Reserve System creates new money, it causes the stock market to rally.
(b) When the Federal Reserve System creates new money, it dilutes the value of the money already in the system.
(c) When the Federal Reserve System creates new money, it increases the value of the money already in the system.
(d) When the Federal Reserve System creates new money, it improves the overall economy.

4. What risky loan activities have banks participated in?
(a) Banks loaned depositors' money out to poor people during the Great Depression.
(b) Banks loaned depositors' money out to risky debtors who would likely not be able to pay the loans off.
(c) Banks loaned depositors' money out to to the US government in times of economic downturns.
(d) Banks loaned depositors' money to foreign governments who refused to repay the loans.

5. The author made what sports analogy to describe the problems with the banking system?
(a) Using a golf analogy, the problems with the banking system were presented in a fairly understandable way.
(b) Using a baseball analogy, the problems with the banking system were presented in a fairly understandable way.
(c) Using a football analogy, the problems with the banking system were presented in a fairly understandable way.
(d) Using a soccer analogy, the problems with the banking system were presented in a fairly understandable way.

Short Answer Questions

1. What did the U.S. government do to support banks?

2. What does the FDIC stand for?

3. What do some feel was the reason for establishing the Federal Reserve?

4. Why did banks ask for interest-only payments?

5. What happened when a debtor defaulted on a loan?

(see the answer key)

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