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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What did the author feel was the ultimate goal in establishing the IMF and the World Bank?
(a) The ultimate goal was to establish the Euro as the single world currency.
(b) The ultimate goal was to put the United Nations in control of world currency.
(c) The ultimate goal was to bring about a single world government that had control of all currencies.
(d) The ultimate goal was to establish the US dollar as the single world currency.

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

3. How was some property converted for home ownership during the 1980s?
(a) In some towns, student housing was converted to property that was sold to homeowners.
(b) Less expensive condominiums that often times had been rental apartments became another way. Rent-to-buy deals popped into the market.
(c) Trailer parks were developed as suburban subdivisions.
(d) Some storefront small business buildings were converted to property that was sold for private homes.

4. What is a fractional money system?
(a) A fractional money system is one in which paper money was initially backed by gold but was later diluted when the gold was invested in foreign interests.
(b) A fractional money system is one in which paper money was initially backed by gold but was later diluted as more paper money was printed.
(c) A fractional money system is one in which paper money was initially backed by gold but was later diluted with the backing of silver.
(d) A fractional money system is one in which paper money was initially backed by gold but was later diluted when the gold was devalued.

5. How was the nationalization of banks justified?
(a) Nationalization was necessary for the nation's standing in the world.
(b) Nationalization was necessary for the public good.
(c) Nationalization was necessary for the banking industry.
(d) Nationalization was necessary for the IMF.

6. What was the main cause of the economic meltdown in 2008?
(a) Toxic assets, also known as mortgages and loans were the main cause for the 2008 economic meltdown.
(b) An unstable world economy was the main cause for the 2008 economic meltdown.
(c) The lack of Congressional legislation was the main cause for the 2008 economic meltdown.
(d) The US deficit was the main cause for the 2008 economic meltdown.

7. What new way of home ownership emerged in the 1980s?
(a) A government sponsored home buyer's savings program was established.
(b) Condominiums became a new way to buy a home.
(c) Housing co-ops became another way to buy a home.
(d) The government incentivized buyers to buy foreclosed upon homes.

8. What monetary system did the Constitution of the newly formed United States require?
(a) When the United States was formed, the Constitution required that all precious metal be in the control of the government.
(b) When the United States was formed, the Constitution required gold-backed money.
(c) When the United States was formed, the Constitution required a paper currency system.
(d) When the United States was formed, the Constitution required a fractional money system.

9. 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.

10. What impact did the Greek currency system have on the economy?
(a) The Greek currency system led to a stable economy.
(b) The Greek currency system led to an unstable economy.
(c) The Greek currency system had no effect on the economy.
(d) The Greek currency system led to other cultures creating similar systems.

11. What was the impact of the creation of new money on the currency?
(a) People considered the creation of new money inflationary as the prices of goods and services rose, but in reality this was increasing the value of the currency.
(b) People considered the creation of new money inflationary as the prices of goods and services rose, but in reality this was a devaluing of the currency.
(c) People considered the creation of new money inflationary as the prices of goods and services rose but had no impact on the currency.
(d) People considered the creation of new money inflationary as the prices of goods and services rose, but in reality it was strengthening the currency in the world market.

12. What important aspect about the economic history of the country did the author fail to mention?
(a) The author failed to mention that our economic system may have been fixed at one time and then broken again.
(b) The author failed to mention that our economic system is impossible to fix.
(c) The author failed to mention that our economic system depends on the success of the stock market.
(d) The author failed to mention that our economic system depends on foreign investments.

13. Why was housing becoming difficult to obtain in the 1980s?
(a) The cost of housing was sky-rocketing.
(b) Congressional actions began to place restrictive regulations on house buying.
(c) The construction industry was experiencing labor conflicts.
(d) Wages were not keeping up with inflation, which made housing harder to obtain.

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

15. During which president's administration were policies that were a hybrid of socialism and capitalism developed?
(a) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during the Eisenhower administration.
(b) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during the Nixon administration.
(c) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during the Truman administration.
(d) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during Franklin D. Roosevelt's administration.

Short Answer Questions

1. What occurred when coinage was weakened through lower percentages of precious metal or completing stripped of such backing?

2. What impacted housing prices in the Midwest states?

3. What do some feel was the reason for establishing the Federal Reserve?

4. When were the International Monetary Fund and World Bank established?

5. What economic group is hit the hardest by an inflation?

(see the answer keys)

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