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This quiz consists of 5 multiple choice and 5 short answer questions through Section II. A Crash Course on Money, Chapters 9-10 The Secret Science; The Mandrake Mechanism.

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) Banks did not thoroughly check out the risk factor of some borrowers.
(c) The US Congress passed legislation that required banks to make ten percent of their loans to risky borrowers.
(d) Banks are required by the Federal Reserve to make a certain percentage of risky loans.

2. Why did governments favor banks based on a fiat money system?
(a) Governments liked the fiat money because it was a way of confiscating wealth from the citizens without raising taxes.
(b) Governments liked the fiat money because it was a way of confiscating wealth from the rich and redistributing it to the poor.
(c) Governments liked the fiat money because it allowed them to hoard gold.
(d) Governments liked the fiat money because it allowed them to raise taxes.

3. What is the main transport of both Amtrak and Conrail?
(a) Amtrak operates as a commuter train while Conrail operates as a long-distance carrier.
(b) Amtrak is the main carrier for government cargo and Conrail is available to the general public.
(c) Amtrak had been the freight side of Penn Central, while Conrail had been the passenger side.
(d) Amtrak had been the passenger side of Penn Central, while Conrail had been the freight side.

4. What major banks failed in 1972?
(a) In 1972, Bank of America and Citibank failed.
(b) In 1972, First Bank of Michigan and New York Bank both failed.
(c) First Bank of California and Wells Fargo Bank failed in 1972.
(d) Unity Bank fell in 1972, as did the Commonwealth Bank of Detroit.

5. Why did banks offer debtors more credit?
(a) Banks offered more credit to debtors to increase interest payments to the them.
(b) Banks offered more credit to debtors to help them purchase homes.
(c) Banks offered more credit to debtors to so they could increase their purchasing power.
(d) Banks offered more credit to debtors to help improve their credit rating.

Short Answer Questions

1. What impact did the Greek currency system have on the economy?

2. How did poor regulation contribute to the Savings and Loan crisis of the 1980s?

3. What is the true function of the FDIC?

4. What is the status of a loan that is "underwater?"

5. What was one of the strongest arguments in favor of bank regulation versus nationalization?

(see the answer key)

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