|Name: _________________________||Period: ___________________|
This quiz consists of 5 multiple choice and 5 short answer questions through Section I. What Creature Is This? Chapter 3 Protectors of the Public.
Multiple Choice Questions
1. How does a currency drain occur within the banking system?
(a) A currency drain occurs when the government devalues the currency system.
(b) A currency drain occurs when the Federal government demands repayment of loans.
(c) A currency drain occurs when foreign investors withdrawn their funds from US banks.
(d) A currency drain happened when many depositors wrote checks, and the receivers of the checks cashed them at another bank, thereby requiring more money from the first bank than it had on hand.
2. If the debtors stopped paying banks altogether, what action would the Federal Reserve System take?
(a) If the debtors stopped paying altogether, the Federal Reserve System filed suit in Federal Court.
(b) If the debtors stopped paying altogether, the Federal Reserve System fined them.
(c) If the debtors stopped paying altogether, the Federal Reserve System gave the banks more money.
(d) If the debtors stopped paying altogether, the Federal Reserve System refused to back the bad debt.
3. How did the banks make their money?
(a) The banks made money on both interest ad principle payments.
(b) The banks made money on their cash flow.
(c) The banks made money on interest, not principle, payments.
(d) The banks made money on principle, not on interest payments.
4. What resulted from the 1970 Penn Central Railroad bailout?
(a) Travel in the US decreased as a result of the bailout.
(b) Air traffic increased after the bailout.
(c) More roads were built by the government as a result of the bailout.
(d) The 1970 Penn Central Railroad bailout resulted in government-owned Amtrak and privately owned Conrail.
5. What was one of the strongest arguments in favor of bank regulation versus nationalization?
(a) An argument in favor of regulation was that it would purge the system of fraud and abuse.
(b) An argument in favor of regulation was that it would cause less unemployment.
(c) An argument in favor of regulation was that the American people felt uncomfortable with nationalization.
(d) An argument in favor of regulation was that, when properly administered, it had worked from the time of Franklin D. Roosevelt (President of the US from 1933 to 1945) to 1970.
Short Answer Questions
1. When the entire banking system failed, what did the Federal government turn to to bolster the failed back up system?
2. Prior to the establishment of the Federal Reserves, what caused massive bank failures?
3. What importance does political ideology have on the nationalization of banks?
4. What city became a major part of the welfare state in 1975?
5. What economic group is hit the hardest by an inflation?
This section contains 667 words
(approx. 3 pages at 300 words per page)