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This quiz consists of 5 multiple choice and 5 short answer questions through Section I. What Creature Is This? Chapter 2 The Name of the Game Is Bailout.

Multiple Choice Questions

1. What happens when the Federal Reserve System prints new money?
(a) When the Federal Reserve System creates new money, it increases the value of the money already in the system.
(b) When the Federal Reserve System creates new money, it improves the overall economy.
(c) When the Federal Reserve System creates new money, it dilutes the value of the money already in the system.
(d) When the Federal Reserve System creates new money, it causes the stock market to rally.

2. 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 to keep the profits coming in.
(d) The bank would arrange for interest payments only so that their customers could keep a good credit rating>

3. What was the location of the meeting where the concept of the Federal Reserve was developed?
(a) The concept of the Federal Reserve was developed on Long Island.
(b) The concept of the Federal Reserve was developed on Jekyll Island.
(c) The concept of the Federal Reserve was developed on Alcatraz Island.
(d) The concept of the Federal Reserve was developed in the Hawaiin Islands.

4. Why has bank fraud never been eliminated?
(a) Financial experts were taught that the way banking worked in the US was the only way it could work, and so the fraud kept on going.
(b) The Federal Reserve was influenced by lobbyists who advocated fraudulent regulations.
(c) The Federal Reserve tried to institute European standards which led to the perpetuation of fraud.
(d) The Federal Reserve was controlled by outside political interests that fostered fraud.

5. How did many people feel about those who went too far into debt?
(a) Many argued that people who went too far into debt had done this on their own--nobody had forced people into the mortgages or credit cards.
(b) Many felt that people who were in debt had been encouraged to do so by political figures.
(c) Many felt that the nation had been taught to rely too much on credit.
(d) Many argued that those in deep debt should be forgiven much of their dept because of the reclining economy.

Short Answer Questions

1. Who was the mastermind behind the Federal Reserve?

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

3. What did the U.S. government do to support banks?

4. This conspiracy theory about the Federal Reserve pointed the finger at the meeting on Jekyll Island that occurred in 1910.

5. The banking system before the Federal Reserve System allowed banks to lend out what percentage of money against one percent in deposits.

(see the answer key)

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