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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 was one of the strongest arguments in favor of bank regulation versus nationalization?
(a) 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.
(b) An argument in favor of regulation was that it would purge the system of fraud and abuse.
(c) An argument in favor of regulation was that it would cause less unemployment.
(d) An argument in favor of regulation was that the American people felt uncomfortable with nationalization.

2. Which European bank become the model for the Federal Reserve System?
(a) Bank One of Rome became the model for the Federal Reserve System.
(b) The Bank of Madrid became the model for the Federal Reserve System.
(c) The Bank of England became the model for the Federal Reserve System.
(d) First Banc of France became the model for the Federal Reserve System

3. How is the Federal Reserve System reviewed in general?
(a) The Federal Reserve System had become the economic leader of the country.
(b) The Federal Reserve System had become known to have the strictest lending standards.
(c) The Federal Reserve System had become the lender of last resort.
(d) The Federal Reserve System had become the nation's first source of lending.

4. 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.

5. What was a fundamental flaw in a paper money system not backed by gold?
(a) The temptation was too strong to simply print more money which led to severe inflation.
(b) The temptation was too strong to simply print more money which led to economic stability.
(c) The temptation was too strong to simply print more money which led to economic instability.
(d) The temptation was too strong to simply print more money which led to severe deflation.

Short Answer Questions

1. What is the fundamental basis of capitalism?

2. What risky loan activities have banks participated in?

3. What caused the collapse of the Bank of Hamburg in 1813?

4. What may have contributed to the problems of the S&Ls in the 1980s?

5. What culture first developed the modern equivalent of the banking industry?

(see the answer key)

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