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

Multiple Choice Questions

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

2. What is the status of a loan that is "underwater?"
(a) When a home loan is underwater, the homeowner must take out a second mortgage.
(b) When a home loan is underwater, the homeowner owns more on the home than it is worth on the market.
(c) When a home loan is underwater, the homeowner is forced into foreclosure by the lender.
(d) When a home loan is underwater, the homeowner is forced into bankruptcy.

3. What happened when a debtor defaulted on a loan?
(a) When a debtor defaulted on a loan, he would first ask for more time to pay.
(b) When a debtor defaulted on a loan, he would ask the government for a guaranteed loan.
(c) When a debtor defaulted on a loan, he would ask loan payments be waived.
(d) When a debtor defaulted on a loan, he would stop making payments.

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

5. 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 fithy 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 sixty 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 ninety-nine 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 twenty percent loaned out with only one percent in deposits.

6. If the debtors stopped paying banks altogether, what action would the Federal Reserve System take?
(a) If the debtors stopped paying altogether, the Federal Reserve System fined them.
(b) If the debtors stopped paying altogether, the Federal Reserve System filed suit in Federal Court.
(c) If the debtors stopped paying altogether, the Federal Reserve System gave the banks more money.
(d) If the debtors stopped paying altogether, the Federal Reserve System refused to back the bad debt.

7. When the entire banking system failed, what did the Federal government turn to to bolster the failed back up system?
(a) When the whole banking system collapsed, taxpayer money went into bolstering the failed system back up.
(b) When the whole banking system collapsed, foreign investments went into bolstering the failed system back up.
(c) When the whole banking system collapsed, money from newly issued government bonds went into bolstering the failed system back up.
(d) When the whole banking system collapsed, the debt ceiling was raised to bolster the failed system back up.

8. What major banks failed in 1972?
(a) In 1972, Bank of America and Citibank failed.
(b) Unity Bank fell in 1972, as did the Commonwealth Bank of Detroit.
(c) In 1972, First Bank of Michigan and New York Bank both failed.
(d) First Bank of California and Wells Fargo Bank failed in 1972.

9. Why were S&Ls popular with those seeking loans in the 1980s?
(a) It was easier for those seeking loans to be approved by S&Ls.
(b) S&L loans were often approved on the spot.
(c) S&L loans allowed customers to defer payments for up to one year.
(d) The S&Ls were offering better interest rates on deposits than banks, and that attracted money into them.

10. 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 Depositor's Insurance Corporation.
(d) The FDIC stands for The First Debt Institute of Connneticut.

11. Why was there skepticism about the author's analysis?
(a) The author was found to be a lobbyist for conservative causes.
(b) Doubt existed because the author's entire analysis was an exercise in historical analysis from subsequent events, which is by nature flawed due to the guesswork involved.
(c) The author was not considered an expert on the subject.
(d) The author refused to be questioned about his research.

12. The nationalization of banks has occurred during conservative or liberal administrations?
(a) The nationalization of banks occurred during conservative as well as liberal administrations.
(b) The nationalization of banks occurred during conservative administrations.
(c) The nationalization of banks occurred when there is equal balance among all branches of government.
(d) The nationalization of banks occurred during liberal administrations.

13. Why did all nations become socialistic in the New World Order?
(a) In the New World Order, all nations became socialistic through United Nations declaration.
(b) In the New World Order, all nations became socialistic through the use of the IMF and direct loans from the industrialized nations to the undeveloped nations.
(c) In the New World Order, all nations became socialistic through deficit loan practices.
(d) In the New World Order, all nations became socialistic as a result of the abandonment of the gold standard.

14. After analysis, what was the real nature of the S&L system?
(a) The S&L system turned out to actually be operated by international interests.
(b) The S&L system turned out to actually be criminal.
(c) The S&L system turned out to actually be a cartel within a cartel.
(d) The S&L system turned out to actually be a scam.

15. What problems did the economy of the American Colonies incur?
(a) The American Colonies experienced instability in their economy.
(b) The American Colonies experienced economic uncertainty due to interference by England.
(c) The American Colonies experienced terrible bouts of inflation.
(d) The American Colonies experienced terrible bouts of deflation.

Short Answer Questions

1. What resulted after the first electronic run on banks in 1983?

2. What country contributed the largest investment in the IMF?

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

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

5. What U.S. president removed the gold standard from the US dollar?

(see the answer keys)

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