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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 problems did the economy of the American Colonies incur?
(a) The American Colonies experienced terrible bouts of inflation.
(b) The American Colonies experienced terrible bouts of deflation.
(c) The American Colonies experienced economic uncertainty due to interference by England.
(d) The American Colonies experienced instability in their economy.

2. 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 by making special laws for them.
(c) The Federal Reserve helped banks to stay in operation.
(d) The Federal Reserve helped banks keep a healthy cash flow.

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

4. What is a fractional money system?
(a) A fractional money system is one in which paper money was initially backed by gold but was later diluted with the backing of silver.
(b) A fractional money system is one in which paper money was initially backed by gold but was later diluted as more paper money was printed.
(c) A fractional money system is one in which paper money was initially backed by gold but was later diluted when the gold was devalued.
(d) A fractional money system is one in which paper money was initially backed by gold but was later diluted when the gold was invested in foreign interests.

5. How was some property converted for home ownership during the 1980s?
(a) Less expensive condominiums that often times had been rental apartments became another way. Rent-to-buy deals popped into the market.
(b) Trailer parks were developed as suburban subdivisions.
(c) Some storefront small business buildings were converted to property that was sold for private homes.
(d) In some towns, student housing was converted to property that was sold to homeowners.

Short Answer Questions

1. Why were S&Ls popular with those seeking loans in the 1980s?

2. What historic reference is contained in this chapter?

3. Conspiracy theorists connected the potential of world socialism to what organization?

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

5. What was the location of the meeting where the concept of the Federal Reserve was developed?

Short Essay Questions

1. According to Chapter 7, what culture was the first to create a currency system based on gold and silver?

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

3. In Chapter 8, how did the development of paper money begin?

4. In Chapter 3, what occurred when Congress stepped in during the S&L crisis?

5. In Chapter 2, what was the main cause of the economic meltdown in 2008?

6. According to Chapter 5, what was the relationship between the UN and the World Bank and IMF?

7. According to Chapter 3, how did the government help the Lockheed Corporation?

8. According to Chapter 1, what was the main purpose of the Federal Reserve System?

9. According to Chapter 3, what were some of the major organizations helped by government bailouts?

10. According to Chapter 4, what presidential action may have contributed to the economic woes?

(see the answer keys)

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