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

Multiple Choice Questions

1. What drove prices upward during the War of 1812?
(a) During the War of 1812, the US Congress created bank notes that the government used to purchase war materials, tripling the money supply and driving prices upwards.
(b) During the War of 1812, the Federal Reserve created bank notes that the government used to purchase war materials, tripling the money supply and driving prices upwards.
(c) During the War of 1812, wildcat banks created bank notes that the government used to purchase war materials, tripling the money supply and driving prices upwards.
(d) During the War of 1812, the central bank created bank notes that the government used to purchase war materials, tripling the money supply and driving prices upwards.

2. How did governments devalue currency in fiat money systems?
(a) This was accomplished by devaluing the currency through taxation..
(b) This was accomplished by devaluing the currency through legislation.
(c) This was accomplished by devaluing the currency through use of the printing press.
(d) This was accomplished by devaluing the currency through regulation.

3. How did large banks react to the Federal Reserve Act?
(a) The leaders of the large banks openly supported the bill and employed congressional lobbyists to fight for it.
(b) The leaders of the large banks put up a good show of opposition, but deep down they wanted this bill to pass even with the compromises.
(c) The leaders of the large banks openly opposed the bill and employed congressional lobbyists to fight it.
(d) The leaders of the large banks put up a good show of opposition, but deep down they did not want this bill to pass even with the compromises.

4. What place in history does the Rothschild family hold?
(a) Mayer Amschel Rothschild and his five sons financed European wars from the middle of the eighteenth century into the nineteenth.
(b) Mayer Amschel Rothschild and his five sons financed worldwide wars from the middle of the eighteenth century into the nineteenth.
(c) Mayer Amschel Rothschild and his five sons financed European wars occurring in the twentieth century.
(d) Mayer Amschel Rothschild and his five sons financed European wars occurring after World War II through the Cold War years.

5. What were the sales of English and French war bonds used for?
(a) Most of the money from the sales of the war bonds were spent on German war materials.
(b) Most of the money from the sales of the war bonds were spent on Russian artillery.
(c) Most of the money from the sales of the war bonds were spent on uniforms and supplies for the soldiers.
(d) Most of the money from the sales of the war bonds were spent on American war materials.

6. What occurred after the Second Bank of the United States was created?
(a) The Second Bank of the United States was created in 1816 and introduced the boom-bust cycle.
(b) The Second Bank of the United States was created in 1816 and created a booming economy.
(c) The Second Bank of the United States was created in 1816 and caused inflationary conditions.
(d) The Second Bank of the United States was created in 1816 and caused a period of deflation.

7. When was the Federal Reserve Act passed?
(a) The Federal Reserve Act passed by large majorities in Congress just before the stock market crash of 1929.
(b) The Federal Reserve Act passed by large majorities in Congress just after World War I ended.
(c) The Federal Reserve Act passed by large majorities in Congress just before Christmas, 1913.
(d) The Federal Reserve Act passed by large majorities in Congress just before World War II commenced.

8. How were some organizations able to profit during the boom-bust cycle?
(a) Big fortunes were also made by powerful financiers through illegal operations. The Bank of England, the House of Morgan and the Rothschilds were among the winners.
(b) Big fortunes were also made by powerful financiers through legislation that favored them. The Bank of England, the House of Morgan and the Rothschilds were among the winners.
(c) Big fortunes were also made by powerful financiers through market manipulations. The Bank of England, the House of Morgan and the Rothschilds were among the winners.
(d) Big fortunes were also made by powerful financiers by hoarding cash. The Bank of England, the House of Morgan and the Rothschilds were among the winners.

9. What is the basic structure of the U.S. monetary system?
(a) The monetary system in the U.S. was constructed for debt to be necessary in order for the money supply to remain in existence.
(b) The monetary system in the U.S. was constructed for debt to be necessary in order for the Congress to pass tax increases.
(c) The monetary system in the U.S. was constructed for debt to be necessary in order for the economy to flourish.
(d) The monetary system in the U.S. was constructed for debt to be necessary in order for Federal Reserve to remain in control of monetary concerns.

10. What action was taken to keep England from sliding into depression?
(a) To keep Britain from sliding into depression, the U.S. dollar was intentionally inflated through the US Congress.
(b) To keep Britain from sliding into depression, the U.S. dollar was intentionally inflated through the Federal Reserve System.
(c) To keep Britain from sliding into depression, the U.S. dollar was intentionally deflated through the Federal Reserve System.
(d) To keep Britain from sliding into depression, the U.S. dollar was intentionally inflated through an activist Supreme Court.

11. What caused the economic downturn in 1818?
(a) In 1818 an economic downturn began as the US Congress tightened loan requirements and shrunk the money supply by calling in old loans.
(b) In 1818 an economic downturn began as the IMF tightened loan requirements and shrunk the money supply by calling in old loans.
(c) In 1818 an economic downturn began as the Federal Reserve tightened loan requirements and shrunk the money supply by calling in old loans.
(d) In 1818 an economic downturn began as the banks tightened loan requirements and shrunk the money supply by calling in old loans.

12. What decade marked the beginning of a tremendous surge in U.S. debt?
(a) The U.S. grew its debt tremendously since 1930.
(b) The U.S. grew its debt tremendously since 1910.
(c) The U.S. grew its debt tremendously since 1960.
(d) The U.S. grew its debt tremendously since 1950.

13. What bank was The Bank of North America modeled after?
(a) The Continental Congress established The Bank of North America in 1781, and it was modeled after the Bank of Russia.
(b) The Continental Congress established The Bank of North America in 1781, and it was modeled after the Bank of England.
(c) The Continental Congress established The Bank of North America in 1781, and it was modeled after the Bank of Germany.
(d) The Continental Congress established The Bank of North America in 1781, and it was modeled after the Bank of France.

14. How many revolutions did Russia actually undergo?
(a) Russia went through five revolutions.
(b) Russia went through two revolutions.
(c) Russia went through seven revolutions.
(d) Russia went through three revolutions.

15. The sinking of the Lusitania provoked what country to enter into World War I?
(a) The sinking of the Lusitania and the death of its passengers, many of whom were US citizens, brought the US into the war.
(b) The sinking of the Lusitania and the death of its passengers, many of whom were British citizens, brought the England into the war.
(c) The sinking of the Lusitania and the death of its passengers, many of whom were German citizens, brought the Germany into the war.
(d) The sinking of the Lusitania and the death of its passengers, many of whom were French citizens, brought the France into the war.

Short Answer Questions

1. What realistic scenario was discussed in Chapter 26 involving the U.S. monetary system?

2. What portion of the U.S. debt did a large portion of the tax dollar pay for?

3. What dispute did President Andrew Jackson have with the leader of The Second Bank?

4. What would be the role of the IMF and World Bank in the new world order?

5. How did England and France, at least in part, finance their wars?

(see the answer keys)

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