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This quiz consists of 5 multiple choice and 5 short answer questions through Section I. What Creature Is This? Chapter 3 Protectors of the Public.

Multiple Choice Questions

1. How did the banks make their money?
(a) The banks made money on their cash flow.
(b) The banks made money on interest, not principle, payments.
(c) The banks made money on principle, not on interest payments.
(d) The banks made money on both interest ad principle payments.

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 poor and middle classes.
(b) 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.
(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 middle classes by stealing from the rich and poor classes.

3. What city became a major part of the welfare state in 1975?
(a) Chicago became a major part of the welfare state in 1975 via Federal government bailouts.
(b) New York City became a major part of the welfare state in 1975 via Federal government bailouts.
(c) Los Angeles became a major part of the welfare state in 1975 via Federal government bailouts.
(d) Atlanta became a major part of the welfare state in 1975 via Federal government bailouts.

4. What do many people feel was the real reason behind the establishment of the Federal Reserve?
(a) Many feel that the real reason for creating the Federal Reserve was to keep the middle class from failing.
(b) Many feel that the real reason for creating the Federal Reserve was to keep poor people from turning to crime.
(c) Many feel that the real reason for creating the Federal Reserve was to keep the rich from becoming too powerful.
(d) Many feel that the real reason for creating the Federal Reserve was to keep rich people in power.

5. What type of person was Paul Moritz Warburg?
(a) Paul Moritz Warburg was a stubborn man concerned only with the wealth of the upper class.
(b) Paul Moritz Warburg was an elitist who was not concerned with the concerns of the poor.
(c) Paul Moritz Warburg was a mild-mannered, shy and sensitive man.
(d) Paul Moritz Warburg was a rude and greedy man.

Short Answer Questions

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

2. Why did banks ask for interest-only payments?

3. Prior to the establishment of the Federal Reserves, what caused massive bank failures?

4. What was the location of the meeting where the concept of the Federal Reserve was developed?

5. When the entire banking system failed, what did the Federal government turn to to bolster the failed back up system?

(see the answer key)

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