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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. Why was the "Federal Reserve System," so named?
(a) The "Federal Reserve System" was so named so that people would have respect for it.
(b) The "Federal Reserve System" was so named so that people would know that it was part of the Federal government.
(c) The "Federal Reserve System" was so named because its offices were not state run.
(d) The "Federal Reserve System" was so named so that people would think it was part of the Federal government.

2. The Federal Reserve System was designed to control what element of member banks?
(a) The Federal Reserve System was designed to control how much reserve cash any member bank had to keep on hand.
(b) The Federal Reserve System was designed to control how much reserve cash a bank can invest in its expansion.
(c) The Federal Reserve System was designed to control a bank's cash flow.
(d) The Federal Reserve System was designed to control a bank's ability to make loans.

3. How did the New World Order develop?
(a) The New World Order was an outgrowth of the international events that led up to the Great Depression of 1929.
(b) The New World Order was an outgrowth of the international events that led up to the fall of Nazism, specifically the defeat of Nazi Germany.
(c) The New World Order was an outgrowth of the international events that led up to the fall of Communism, specifically the dissolution of the USSR.
(d) The New World Order was an outgrowth of the international events that led to the defeat of the Axis powers in World War II.

4. What major banks failed in 1972?
(a) In 1972, First Bank of Michigan and New York Bank both failed.
(b) First Bank of California and Wells Fargo Bank failed in 1972.
(c) Unity Bank fell in 1972, as did the Commonwealth Bank of Detroit.
(d) In 1972, Bank of America and Citibank failed.

5. What resulted when paper money was not backed with gold or silver?
(a) Money not backed by precious metal led to deflation and political upheaval.
(b) Money not backed by precious metal led to booming economies and political stability.
(c) Money not backed by precious metal led to inflation and political upheaval.
(d) Money not backed by precious metal led to higher deficits.

Short Answer Questions

1. What was a fundamental flaw in a paper money system not backed by gold?

2. How did the government provide economic support to Lockheed Corporation in 1970?

3. What action was taken by the Federal Reserve during the 1980s S&L crisis?

4. The nationalization of banks has occurred during conservative or liberal administrations?

5. What is a fractional money system?

Short Essay Questions

1. In Chapter 7, what impact did the Greek currency system have on the economy?

2. In Chapter 6, why did all nations, in the author's opinion, become socialistic in the New World Order?

3. In Chapter 3, what is the first bailout that is covered in this book?

4. In Chapter 8, what did the issuance of the first paper money lead to?

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

6. In Chapter 1, how is a "public run" defined?

7. In Chapter 2, how did the banks make their money?

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

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

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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