This quiz consists of 5 multiple choice and 5 short answer questions through Section II. A Crash Course on Money, Chapters 7-8 The Barbaric Metal; Fool's Gold.

Multiple Choice Questions

1. What did the issuance of the first paper money lead to?
(a) The lending process evolved from the establishment of the paper money system.
(b) The class system evolved from the establishment of the paper money system.
(c) Banks evolved from the establishment of the paper money system.
(d) Stronger economies evolved from the establishment of the paper money system.

2. The banking system before the Federal Reserve System allowed banks to lend out what percentage of money against one percent in deposits.
(a) The banking system before the Federal Reserve System allowed banks to lend out more money than they held in deposits, up to ninety-nine percent loaned out with only one percent in deposits.
(b) The banking system before the Federal Reserve System allowed banks to lend out more money than they held in deposits, up to fithy percent loaned out with only one percent in deposits.
(c) The banking system before the Federal Reserve System allowed banks to lend out more money than they held in deposits, up to twenty percent loaned out with only one percent in deposits.
(d) The banking system before the Federal Reserve System allowed banks to lend out more money than they held in deposits, up to sixty percent loaned out with only one percent in deposits.

3. Why did banks make risky loans?
(a) Banks are required by the Federal Reserve to make a certain percentage of risky loans.
(b) The banks had incentive in terms of high profits for granting mortgages to home buyers who would not be able to pay the loans off, but who might be able to make interest payments.
(c) The US Congress passed legislation that required banks to make ten percent of their loans to risky borrowers.
(d) Banks did not thoroughly check out the risk factor of some borrowers.

4. What do some feel was the reason for establishing the Federal Reserve?
(a) The Federal Reserve System was concocted to stabilize the economy.
(b) The Federal Reserve System was concocted not to stabilize the economy but to put economic control into the hands of a few people who agreed not to compete with one another.
(c) The Federal Reserve System was concocted not to stabilize the economy and create an economy that was distributed equally among the population.
(d) The Federal Reserve System was concocted to put economic control into the hands of the people.

5. How did poor regulation contribute to the Savings and Loan crisis of the 1980s?
(a) Government regulations allowed S&Ls to claim assets that had no value, such as community good will toward them, and encouraged bad lending practices to increase home ownership.
(b) Government regulations allowed S&Ls to hoard money to increase their cash flow.
(c) Government regulations allowed S&Ls to file individual bankruptcies.
(d) Government regulations allowed S&Ls did not require them to repay their debtors in full.