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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. What was the main cause of the economic meltdown in 2008?
(a) The lack of Congressional legislation was the main cause for the 2008 economic meltdown.
(b) An unstable world economy was the main cause for the 2008 economic meltdown.
(c) Toxic assets, also known as mortgages and loans were the main cause for the 2008 economic meltdown.
(d) The US deficit was the main cause for the 2008 economic meltdown.

2. What new way of home ownership emerged in the 1980s?
(a) Housing co-ops became another way to buy a home.
(b) A government sponsored home buyer's savings program was established.
(c) Condominiums became a new way to buy a home.
(d) The government incentivized buyers to buy foreclosed upon homes.

3. What importance does political ideology have on the nationalization of banks?
(a) The nationalization of banks is such a strong part of the overall economy that political ideology did not matter.
(b) Political lobbyists for banks have great influence on their nationalization.
(c) The Congressional chairman of the Banking Committee influences support for nationalization.
(d) Liberal ideologues have the great influence on bank legislation.

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

5. What do some feel was the reason for establishing the Federal Reserve?
(a) The Federal Reserve System was concocted to put economic control into the hands of the people.
(b) The Federal Reserve System was concocted not to stabilize the economy but to put economic control into the hands of a few people who agreed not to compete with one another.
(c) The Federal Reserve System was concocted to stabilize the economy.
(d) The Federal Reserve System was concocted not to stabilize the economy and create an economy that was distributed equally among the population.

Short Answer Questions

1. What resulted from the 1970 Penn Central Railroad bailout?

2. What was one of the strongest arguments in favor of bank regulation versus nationalization?

3. When did the American public become interested in socialism as an alternative to capitalism?

4. What does the FDIC stand for?

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

Short Essay Questions

1. According to Chapter 5, what country contributed the largest investment in the IMF?

2. According to Chapter 2, what is the Federal Deposit Insurance Corporation?

3. In Chapter 4, how was the employment picture beginning to change?

4. In Chapter 2, why did banks make risky loans?

5. According to Chapter 5, what US president abandoned the gold standard from the US dollar?

6. According to Chapter 1, what did over-lending by banks result in?

7. According to Chapter 7, how did modern monetary systems originate historically?

8. According to Chapter 2, how did people react to the creation of new money?

9. According to Chapter 3, the nationalization of banks is more likely to occur under conservative or liberal administrations?

10. According to Chapter 7, What can result when paper money is not backed with gold or silver?

(see the answer keys)

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