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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. Why was the "Federal Reserve System," so named?
(a) The "Federal Reserve System" was so named so that people would think it was part of the Federal government.
(b) The "Federal Reserve System" was so named because its offices were not state run.
(c) The "Federal Reserve System" was so named so that people would know that it was part of the Federal government.
(d) The "Federal Reserve System" was so named so that people would have respect for it.

2. Many people feel that the economic system has been rigged to favor what group of people?
(a) People have realized, at least a little bit, that our economic system had been rigged somewhere in the past to favor the rich by stealing from the government revenues.
(b) People have realized, at least a little bit, that our economic system had been rigged somewhere in the past to favor the middle classes by stealing from the rich and poor classes.
(c) People have realized, at least a little bit, that our economic system had been rigged somewhere in the past to favor the poor by stealing from the rich and middle classes.
(d) People have realized, at least a little bit, that our economic system had been rigged somewhere in the past to favor the rich by stealing from the poor and middle classes.

3. What is the true function of the FDIC?
(a) The FDIC is another way to pay off the debt of the taxpayer.
(b) The FDIC is another way to pay off banking mistakes through the taxpayer.
(c) The FDIC is another way to demonstrate the strength of the economy.
(d) The FDIC is another way to support the people who use banks.

4. 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 in the Hawaiin Islands.
(c) The concept of the Federal Reserve was developed on Jekyll Island.
(d) The concept of the Federal Reserve was developed on Alcatraz Island.

5. Prior to the establishment of the Federal Reserves, what caused massive bank failures?
(a) US bonds were devalued by the Federal authorities.
(b) The Great Depression proved to be an unbearable strain on the banking system.
(c) There were public runs on the banks and currency drains from other banks demanding payments.
(d) Foreign debtors demanded the full repayment of loands.

Short Answer Questions

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

2. What has caused the economy's boom-bust cycle?

3. What type of person was Paul Moritz Warburg?

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

5. What is the definition of a public run on a bank?

(see the answer key)

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