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

Multiple Choice Questions

1. Early banks were supported by what monetary system?
(a) Sometimes the banks were on a gold system, but most were backed by other commodities.
(b) Sometimes the banks were on a gold system, but most often they were backed by their governments.
(c) Sometimes the banks were on a gold system, but most often they went to a fiat money system.
(d) Sometimes the banks were on a gold system, but most often they went to a silver-backed money system.

2. What was the economic outlook in the U.S. following the Civil War?
(a) During the years following the Civil War, the U.S. economy experienced a period of deflation.
(b) During the years following the Civil War, the U.S. economy experienced inflationary times.
(c) During the years following the Civil War, the U.S. economy went through a recession.
(d) During the years following the Civil War, the U.S. economy went through extremes of the boom-bust cycle.

3. What role did J. P. Morgan have in Milner's secret society?
(a) J.P. Morgan financed all sides of political struggles so that no matter who won, that side would be beholding to him and his organizations.
(b) J.P. Morgan financed all sides of political struggles to boost his chances for elective office.
(c) J.P. Morgan financed the sides of political struggles that agreed with his liberal views.
(d) J.P. Morgan financed the sides of political struggles that agreed with his conservative views.

4. What would be the role of the IMF and World Bank in the new world order?
(a) The IMF and World Bank would control cash flow.
(b) The IMF and World Bank would limit lending.
(c) The IMF and World Bank would force the bust-boom cycle.
(d) The IMF and World Bank would force the new world currency on all nations.

5. What were the results of the Russian revolutions?
(a) The first revolution brought in a a somewhat democratic government, while the second brought in a a somewhat democratic government.
(b) The first revolution brought in a somewhat democratic government, while the second brought in a a somewhat democratic government.
(c) The first revolution brought in a monarchy, while the second brought in a tyrannical government.
(d) The first revolution brought in a somewhat democratic government, while the second brought in an oligarchy.

6. What other organizations were spawned from Milner's secret society?
(a) Other parts of the secret society showed up as the Council on Foreign Relations and even the Red Cross.
(b) Other parts of the secret society showed up as the World Bank and Red Cross.
(c) Other parts of the secret society showed up as the International Money Fund.
(d) Other parts of the secret society showed up as the Noble Prize Commission.

7. What culture first developed the modern equivalent of the banking industry?
(a) The city-state of Athens was considered to have started banking as known today by establishing the Banco della Piazza del Rialto in 1584.
(b) The city-state of Venice was considered to have started banking as known today by establishing the Banco della Piazza del Rialto in 1584.
(c) The city-state of Sparta was considered to have started banking as known today by establishing the Banco della Piazza del Rialto in 1584.
(d) The city-state of Rome was considered to have started banking as known today by establishing the Banco della Piazza del Rialto in 1584.

8. 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 French citizens, brought the France into the war.
(c) The sinking of the Lusitania and the death of its passengers, many of whom were British citizens, brought the England into the war.
(d) The sinking of the Lusitania and the death of its passengers, many of whom were German citizens, brought the Germany into the war.

9. Which European bank become the model for the Federal Reserve System?
(a) The Bank of Madrid became the model for the Federal Reserve System.
(b) First Banc of France became the model for the Federal Reserve System
(c) The Bank of England became the model for the Federal Reserve System.
(d) Bank One of Rome became the model for the Federal Reserve System.

10. What were the additional goals after the Federal Reserve was established in 1910?
(a) The goals were to craft legislation to bring about: the elimination of foreign interests; recapturing the bond market; and, shifting losses from the the US to foreign investors.
(b) The goals were to craft legislation to bring about: the elimination of savings and loans; recapturing the foreign loan market; and, shifting losses from the banks to the state governments.
(c) The goals were to craft legislation to bring about: the elimination of small rival banks; recapturing the industrial loan market; and, shifting losses from the banks to the taxpayers.
(d) The goals were to craft legislation to bring about: the elimination of bank oversight; debt elimination; and, shifting losses from the taxpayers to banks.

11. How were some organizations able to profit during the boom-bust cycle?
(a) 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.
(b) 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.
(c) 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.
(d) 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.

12. What caused wildcat banks to develop?
(a) The central bank reintroduced deflation, and as the country expanded, wildcat banks developed in the wilderness.
(b) The Federal Reserve reintroduced inflation, and as the country expanded, wildcat banks developed in the wilderness.
(c) The central bank provided generous funds for loans, and as the country expanded, wildcat banks developed in the wilderness.
(d) The central bank reintroduced inflation, and as the country expanded, wildcat banks developed in the wilderness.

13. Why was the use of fiat money disallowed in the United States?
(a) The reason the framers of the Constitution elected to eliminate fiat money was because a bank run had recently occurred, and the pain of that was still fresh in the framers' minds.
(b) The reason the framers of the Constitution elected to eliminate fiat money was because rampant inflation had recently occurred, and the pain of that was still fresh in the framers' minds.
(c) The reason the framers of the Constitution elected to eliminate fiat money was because rampant deflation had recently occurred, and the pain of that was still fresh in the framers' minds.
(d) The reason the framers of the Constitution elected to eliminate fiat money was because a severe economic downturn had recently occurred, and the pain of that was still fresh in the framers' minds.

14. Why did governments favor banks based on a fiat money system?
(a) Governments liked the fiat money because it allowed them to hoard gold.
(b) Governments liked the fiat money because it was a way of confiscating wealth from the citizens without raising taxes.
(c) Governments liked the fiat money because it allowed them to raise taxes.
(d) Governments liked the fiat money because it was a way of confiscating wealth from the rich and redistributing it to the poor.

15. What restrictions were placed on the Bank of Amsterdam which was established in 1609?
(a) In 1609 the Bank of Amsterdam was formed and restricted from making loans with its deposits.
(b) In 1609 the Bank of Amsterdam was formed and restricted from making more loans than the deposits it received.
(c) In 1609 the Bank of Amsterdam was formed and restricted from taking foreign deposits.
(d) In 1609 the Bank of Amsterdam was formed and restricted from using over twenty percent of its revenues for loans.

Short Answer Questions

1. What occurred after the Second Bank of the United States was created?

2. What restricted the the states from using fiat money?

3. What system was in control of the economy before the Federal Reserve System was established?

4. What occurred after the economic downturn in 1818?

5. After the 1950s, what was the standard of measure used to estimate the US debt?

(see the answer keys)

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