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This quiz consists of 5 multiple choice and 5 short answer questions through Section I. What Creature Is This? Chapter 4 Home Sweet Loan.

Multiple Choice Questions

1. Why did banks ask for interest-only payments?
(a) The bank would arrange for interest payments only to keep the loan viable.
(b) The bank would arrange for interest payments only to take the burden off the customer.
(c) The bank would arrange for interest payments only so that their customers could keep a good credit rating>
(d) The bank would arrange for interest payments only to keep the profits coming in.

2. How open to questioning were the original participants of the 1910 meeting?
(a) None of the participants at the 1910 meeting talked about the establishment of the Federal Reserve in interviews conducted years later.
(b) Most of the participants at the 1910 meeting openly talked about the establishment of the Federal Reserve in interviews conducted years later.
(c) The participants at the 1910 meeting would only agree to talk about the establishment of the Federal Reserve with the New York Times.
(d) Only some of the participants at the 1910 meeting talked about the establishment of the Federal Reserve in interviews conducted years later.

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

4. What risky loan activities have banks participated in?
(a) Banks loaned depositors' money out to to the US government in times of economic downturns.
(b) Banks loaned depositors' money to foreign governments who refused to repay the loans.
(c) Banks loaned depositors' money out to risky debtors who would likely not be able to pay the loans off.
(d) Banks loaned depositors' money out to poor people during the Great Depression.

5. Why were S&Ls popular with those seeking loans in the 1980s?
(a) The S&Ls were offering better interest rates on deposits than banks, and that attracted money into them.
(b) S&L loans allowed customers to defer payments for up to one year.
(c) It was easier for those seeking loans to be approved by S&Ls.
(d) S&L loans were often approved on the spot.

Short Answer Questions

1. The Federal Reserve System was designed to control what element of member banks?

2. If the debtors stopped paying banks altogether, what action would the Federal Reserve System take?

3. Who was the mastermind behind the Federal Reserve?

4. What new way of home ownership emerged in the 1980s?

5. What city became a major part of the welfare state in 1975?

(see the answer key)

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