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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. How were the policies of FDR's administration a departure from capitalism?
(a) They abandoned the principles of the International Monetary Fund that were supposed to have worked with a purely capitalistic system.
(b) They abandoned standards of the Federal Reserve that were supposed to have worked with a purely capitalistic system.
(c) They abandoned Congressional banking regulations that were supposed to have worked with a purely capitalistic system.
(d) They abandoned the free market principles that were supposed to have worked with a purely capitalistic system.

2. How was the nationalization of banks justified?
(a) Nationalization was necessary for the public good.
(b) Nationalization was necessary for the IMF.
(c) Nationalization was necessary for the nation's standing in the world.
(d) Nationalization was necessary for the banking industry.

3. What does the FDIC stand for?
(a) The FDIC stands for The First Debt Institute of Connneticut.
(b) The FDIC stands for The Federal Deposit Insurance Corporation.
(c) The FDIC stands for The First Depositor's Insurance Corporation.
(d) The FDIC stands for The Federal Debt Issuers Company.

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

5. 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 started handing out money directly to the S&Ls as well.
(c) The Federal Reserve System usurped the powers of Congress and began crafting legislation to bail out the S&Ls.
(d) The Federal Reserve System usurped the powers of Congress and forgave the S&Ls their debts.

Short Answer Questions

1. The author made what sports analogy to describe the problems with the banking system?

2. Why did banks make risky loans?

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

4. How is the Federal Reserve System reviewed in general?

5. What happens when the Federal Reserve System prints new money?

(see the answer key)

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