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

Multiple Choice Questions

1. What historic reference is contained in this chapter?
(a) A history of bailouts was outlined in this chapter, starting in 1970 with Penn Central Railroad.
(b) A history of the Federal Reserve chairmain is contained in this section.
(c) A history of legislation regarding the Federal Reserve is contained in this section.
(d) A history of the laws regulating the economy is contained in this chapter.

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

3. How were the policies of FDR's administration a departure from capitalism?
(a) They abandoned the principles of the International Monetary Fund that were supposed to have worked with a purely capitalistic system.
(b) They abandoned the free market principles that were supposed to have worked with a purely capitalistic system.
(c) They abandoned Congressional banking regulations that were supposed to have worked with a purely capitalistic system.
(d) They abandoned standards of the Federal Reserve that were supposed to have worked with a purely capitalistic system.

4. What did the Federal Reserve System help banks to do?
(a) The Federal Reserve helped banks to stay in operation.
(b) The Federal Reserve helped banks keep a healthy cash flow.
(c) The Federal Reserve helped banks by making special laws for them.
(d) The Federal Reserve helped banks keep individuals, businesses and entire countries perpetually in debt and working mostly for the banks.

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

6. What happens when the Federal Reserve System prints new money?
(a) When the Federal Reserve System creates new money, it improves the overall economy.
(b) When the Federal Reserve System creates new money, it causes the stock market to rally.
(c) When the Federal Reserve System creates new money, it increases the value of the money already in the system.
(d) When the Federal Reserve System creates new money, it dilutes the value of the money already in the system.

7. 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.

8. What organization ensures the nationalization of banks?
(a) As long as the Federal Reserve System existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(b) As long as the FDIC existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(c) As long as the International Monetary Fund existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(d) As long as the Congressional Banking Committee existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.

9. What often occurs to a conspiracy theory when deceit is not used to strengthen their case?
(a) Without the use of evasive tactics, the conspiracy theories often fall apart in their early stages of development.
(b) Without using deceit, conspiracy theories usually stand on their own merit.
(c) Without using deceit, conspiracy theories are proven on the arena of public opinion.
(d) Without using deceit, conspiracy theories are often debated in a higher education venue.

10. What was one of the strongest arguments in favor of bank regulation versus nationalization?
(a) An argument in favor of regulation was that the American people felt uncomfortable with nationalization.
(b) An argument in favor of regulation was that, when properly administered, it had worked from the time of Franklin D. Roosevelt (President of the US from 1933 to 1945) to 1970.
(c) An argument in favor of regulation was that it would cause less unemployment.
(d) An argument in favor of regulation was that it would purge the system of fraud and abuse.

11. 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 is impossible to fix.
(b) The author failed to mention that our economic system depends on foreign investments.
(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 may have been fixed at one time and then broken again.

12. What countries did the author point to as failures of the IMF and World Bank?
(a) The author used Greece, Ireland, Italy and Kirghistan as examples of IMF and World Bank failures.
(b) The author used The Sudan, China, Pakistan and Afghanistan as examples of IMF and World Bank failures.
(c) The author used Tanzania, Argentina, Brazil and Mexico as examples of IMF and World Bank failures.
(d) The author used Venezuela, Chili, Cuba and Uraguay as examples of IMF and World Bank failures.

13. What redistribution of wealth occurred as a result of the establishment of the IMF and the World Bank?
(a) It was an effective means of redistributing wealth from rich to poor nations.
(b) It was an effective means of redistributing wealth to the rich to the middle class.
(c) It was an effective means of redistributing wealth from the middle class to the rich.
(d) It was an effective means of redistributing wealth to the rich nations.

14. When were the International Monetary Fund and World Bank established?
(a) In 1944, the Bretton Woods Conference took place, out of which came the International Monetary Fund or IMF and World Bank
(b) The World Bank and International Monetary Fund were established during the Cold War.
(c) The World Bank and International Monetary Fund were established in 1910 at Jekyll Island.
(d) The World Bank and International Monetary Fund were established in 1929 when the Stock Market crashed.

15. Why has bank fraud never been eliminated?
(a) The Federal Reserve was influenced by lobbyists who advocated fraudulent regulations.
(b) The Federal Reserve was controlled by outside political interests that fostered fraud.
(c) Financial experts were taught that the way banking worked in the US was the only way it could work, and so the fraud kept on going.
(d) The Federal Reserve tried to institute European standards which led to the perpetuation of fraud.

Short Answer Questions

1. What action was taken by the Federal Reserve during the 1980s S&L crisis?

2. What unreasonable conclusion does the author make about the IMF and World Bank?

3. What new way of home ownership emerged in the 1980s?

4. What is the main transport of both Amtrak and Conrail?

5. Many people feel that the economic system has been rigged to favor what group of people?

(see the answer keys)

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