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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 has caused the economy's boom-bust cycle?
(a) The economy's boom-bust cycle is caused from trade deficits.
(b) The economy's boom-bust cycle is caused from people hoarding cash.
(c) The economy's boom-bust cycle is caused by the instability of the International Monetary Fund.
(d) The Federal Reserve's advertised purpose was to stabilize the economy, but depressions and recessions have resulted instead in a boom-bust cycle.

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

3. The author made what sports analogy to describe the problems with the banking system?
(a) Using a football analogy, the problems with the banking system were presented in a fairly understandable way.
(b) Using a golf analogy, the problems with the banking system were presented in a fairly understandable way.
(c) Using a baseball analogy, the problems with the banking system were presented in a fairly understandable way.
(d) Using a soccer analogy, the problems with the banking system were presented in a fairly understandable way.

4. How did many people feel about those who went too far into debt?
(a) Many felt that the nation had been taught to rely too much on credit.
(b) Many argued that those in deep debt should be forgiven much of their dept because of the reclining economy.
(c) Many felt that people who were in debt had been encouraged to do so by political figures.
(d) 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.

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

Short Answer Questions

1. How does a currency drain occur within the banking system?

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

3. What is the true function of the FDIC?

4. Who does the Federal Reserve depend on to bail out the country in times of economic collapse?

5. Who was the mastermind behind the Federal Reserve?

(see the answer key)

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