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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. 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 rich people in power.
(b) Many feel that the real reason for creating the Federal Reserve was to keep the middle class from failing.
(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 poor people from turning to crime.

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

3. How is the Federal Reserve System reviewed in general?
(a) The Federal Reserve System had become the lender of last resort.
(b) The Federal Reserve System had become known to have the strictest lending standards.
(c) The Federal Reserve System had become the nation's first source of lending.
(d) The Federal Reserve System had become the economic leader of the country.

4. What did the U.S. government do to support banks?
(a) The U.S. government guaranteed depositor money through Congress.
(b) The U.S. government guaranteed depositor money through the FDIC.
(c) The U.S. government forgave the debot of failing banks.
(d) The U.S. government guaranteed depositor money through private insurance companies.

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

Short Answer Questions

1. What was the impact of the creation of new money on the currency?

2. What was the main argument in favor of nationalizing banks?

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

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

5. In what year was the concept of the Federal Reserve first developed?

(see the answer key)

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