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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. Why has bank fraud never been eliminated?
(a) The Federal Reserve tried to institute European standards which led to the perpetuation of fraud.
(b) The Federal Reserve was influenced by lobbyists who advocated fraudulent regulations.
(c) Financial experts were taught that the way banking worked in the US was the only way it could work, and so the fraud kept on going.
(d) The Federal Reserve was controlled by outside political interests that fostered fraud.

2. This conspiracy theory about the Federal Reserve pointed the finger at the meeting on Jekyll Island that occurred in 1910.
(a) The conspiracy theory surrounding the Federal Reserve was thought to have originated at the 1904 World's Fair.
(b) The conspiracy theory surrounding the Federal Reserve was thought to have originated during FDR's administration.
(c) The conspiracy theory surrounding the Federal Reserve was thought to be hatched at the 1910 Jekyll Island meeting.
(d) The conspiracy theory surrounding the Federal Reserve was thought to have originated during the Great Depression.

3. What happened to many homeowners when the housing market bubble burst?
(a) Many homeowners were forced into foreclosure.
(b) Many homeowners had to take out second mortgages on their properties.
(c) Suddenly people owed more money on their properties than they were worth.
(d) Suddenly people owed more money on their properties than they did when they took out the loan.

4. How did poor regulation contribute to the Savings and Loan crisis of the 1980s?
(a) Government regulations allowed S&Ls to hoard money to increase their cash flow.
(b) Government regulations allowed S&Ls did not require them to repay their debtors in full.
(c) Government regulations allowed S&Ls to claim assets that had no value, such as community good will toward them, and encouraged bad lending practices to increase home ownership.
(d) Government regulations allowed S&Ls to file individual bankruptcies.

5. Why was housing becoming difficult to obtain in the 1980s?
(a) Wages were not keeping up with inflation, which made housing harder to obtain.
(b) The construction industry was experiencing labor conflicts.
(c) The cost of housing was sky-rocketing.
(d) Congressional actions began to place restrictive regulations on house buying.

Short Answer Questions

1. Some tactics include cherry-picking examples while oversimplifying causes.

2. What economic group is hit the hardest by an inflation?

3. What resulted from the 1970 Penn Central Railroad bailout?

4. What did the author argue resulted from the establishment of the IMF and World Bank and the abandonment of the gold standard?

5. What was the impact of the creation of new money on the currency?

Short Essay Questions

1. In Chapter 2, how did the banks make their money?

2. According to Chapter 3, what were some of the major organizations helped by government bailouts?

3. According to Chapter 4, what caused the Savings & Loan crisis of the 1980s?

4. According to Chapter 5, what was the relationship between the UN and the World Bank and IMF?

5. According to Chapter 5, what resulted from the removal of the gold standard?

6. According to Chapter 7, What can result when paper money is not backed with gold or silver?

7. According to Chapter 7, what culture was the first to create a currency system based on gold and silver?

8. In Chapter 2, what was the main cause of the economic meltdown in 2008?

9. According to Chapter 1, what was the main purpose of the Federal Reserve System?

10. According to Chapter 4, what presidential action may have contributed to the economic woes?

(see the answer keys)

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