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

Multiple Choice Questions

1. How open to questioning were the original participants of the 1910 meeting?
(a) None of the participants at the 1910 meeting talked about the establishment of the Federal Reserve in interviews conducted years later.
(b) Most of the participants at the 1910 meeting openly talked about the establishment of the Federal Reserve in interviews conducted years later.
(c) Only some of the participants at the 1910 meeting talked about the establishment of the Federal Reserve in interviews conducted years later.
(d) The participants at the 1910 meeting would only agree to talk about the establishment of the Federal Reserve with the New York Times.

2. What was a fundamental flaw in a paper money system not backed by gold?
(a) The temptation was too strong to simply print more money which led to economic instability.
(b) The temptation was too strong to simply print more money which led to severe deflation.
(c) The temptation was too strong to simply print more money which led to economic stability.
(d) The temptation was too strong to simply print more money which led to severe inflation.

3. What is laudable about the author's work?
(a) The author did provide a convincing argument that our economic system had been broken at some time in the past.
(b) The author provided a clear and concise conservative viewpoint.
(c) The author provided a clear and concise liberal viewpoint.
(d) The author had majored in international economics.

4. 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 Nixon administration.
(b) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during the Truman administration.
(c) The American public's interest in socialism brought about policies that were a hybrid of socialism and capitalism during the Eisenhower 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.

5. 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 rich from becoming too powerful.
(c) Many feel that the real reason for creating the Federal Reserve was to keep poor people from turning to crime.
(d) Many feel that the real reason for creating the Federal Reserve was to keep the middle class from failing.

6. Since its inception in 1910, the Federal Reserve had made what decisions about bank bailouts?
(a) Since its inception in 1910, the Federal Reserve had decided that large banks would be the only banks to get bailouts.
(b) Since its inception in 1910, the Federal Reserve had decided that large banks would get bailouts, medium-sized banks would get some bailouts, and small banks would be left to fail or be acquired by larger banks.
(c) Since its inception in 1910, the Federal Reserve had decided that medium-sized banks would get the majority of bailouts.
(d) Since its inception in 1910, the Federal Reserve had decided that large banks would get bailouts only if they could prove they had complied with all regulations.

7. 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 gave the banks more money.
(c) If the debtors stopped paying altogether, the Federal Reserve System filed suit in Federal Court.
(d) If the debtors stopped paying altogether, the Federal Reserve System refused to back the bad debt.

8. What is the fundamental basis of capitalism?
(a) The main idea behind capitalism was providing welfare to the less fortunate.
(b) The main idea behind capitalism was making investments in foreign interests.
(c) The main idea behind capitalism was making money and hoarding cash.
(d) The main idea behind capitalism was investment and return on investment.

9. 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 depends on foreign investments.
(b) The author failed to mention that our economic system may have been fixed at one time and then broken again.
(c) The author failed to mention that our economic system is impossible to fix.
(d) The author failed to mention that our economic system depends on the success of the stock market.

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

11. How did the banks make their money?
(a) The banks made money on interest, not principle, payments.
(b) The banks made money on both interest ad principle payments.
(c) The banks made money on their cash flow.
(d) The banks made money on principle, not on interest payments.

12. When did the American public become interested in socialism as an alternative to capitalism?
(a) During the Cold War, the American public became interested in socialism as an alternative to capitalism.
(b) During the Great Depression of the 1930s, the American public became interested in socialism as an alternative to capitalism.
(c) After LBJ's Great Society was enacted, the American public became interested in socialism as an alternative to capitalism.
(d) After World War II, the American public became interested in socialism as an alternative to capitalism.

13. What is the main transport of both Amtrak and Conrail?
(a) Amtrak had been the passenger side of Penn Central, while Conrail had been the freight side.
(b) Amtrak had been the freight side of Penn Central, while Conrail had been the passenger side.
(c) Amtrak operates as a commuter train while Conrail operates as a long-distance carrier.
(d) Amtrak is the main carrier for government cargo and Conrail is available to the general public.

14. What resulted from the 1970 Penn Central Railroad bailout?
(a) More roads were built by the government as a result of the bailout.
(b) The 1970 Penn Central Railroad bailout resulted in government-owned Amtrak and privately owned Conrail.
(c) Travel in the US decreased as a result of the bailout.
(d) Air traffic increased after the bailout.

15. Why was gold considered the ideal metal behind a monetary system?
(a) Gold was considered the perfect metal because it was the most sought after of the precious metals.
(b) Gold was considered the perfect metal because of its value and availability.
(c) Gold was considered the perfect metal because it was the most common of the precious metals.
(d) Gold was considered the perfect metal because of its intrinsic value and scarcity throughout history.

Short Answer Questions

1. How do conspiracy theorists strengthen their stands?

2. Why was housing becoming difficult to obtain in the 1980s?

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

4. What major banks failed in 1972?

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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