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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. What action was taken by the Federal Reserve during the 1980s S&L crisis?
(a) The Federal Reserve System usurped the powers of Congress and declared that the S&Ls had the same rights as banks.
(b) The Federal Reserve System usurped the powers of Congress and forgave the S&Ls their debts.
(c) The Federal Reserve System usurped the powers of Congress and started handing out money directly to the S&Ls as well.
(d) The Federal Reserve System usurped the powers of Congress and began crafting legislation to bail out the S&Ls.

2. What restrictions were placed on the Bank of Amsterdam which was established in 1609?
(a) In 1609 the Bank of Amsterdam was formed and restricted from using over twenty percent of its revenues for loans.
(b) In 1609 the Bank of Amsterdam was formed and restricted from making loans with its deposits.
(c) In 1609 the Bank of Amsterdam was formed and restricted from making more loans than the deposits it received.
(d) In 1609 the Bank of Amsterdam was formed and restricted from taking foreign deposits.

3. What did the issuance of the first paper money lead to?
(a) The class system evolved from the establishment of the paper money system.
(b) The lending process evolved from the establishment of the paper money system.
(c) Banks evolved from the establishment of the paper money system.
(d) Stronger economies evolved from the establishment of the paper money system.

4. What resulted when paper money was not backed with gold or silver?
(a) Money not backed by precious metal led to inflation and political upheaval.
(b) Money not backed by precious metal led to higher deficits.
(c) Money not backed by precious metal led to booming economies and political stability.
(d) Money not backed by precious metal led to deflation and political upheaval.

5. What may have contributed to the problems of the S&Ls in the 1980s?
(a) Inflation was in the double-digits and real estate prices were going up rapidly.
(b) Inflation was steady but the deficit was rapidly growing.
(c) Deflation was in the double-digits and real estate prices were going up rapidly.
(d) Inflation was in the double-digits and real estate prices were going rapidly decreasing.

Short Answer Questions

1. What happened to many homeowners when the housing market bubble burst?

2. What is the basic structure of the U.S. monetary system?

3. During the history of the world, what types of things were first traded?

4. How was the nationalization of banks justified?

5. What was a fundamental flaw in a paper money system not backed by gold?

(see the answer key)

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