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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. How were the policies of FDR's administration a departure from capitalism?
(a) They abandoned Congressional banking regulations that were supposed to have worked with a purely capitalistic system.
(b) They abandoned standards of the Federal Reserve that were supposed to have worked with a purely capitalistic system.
(c) They abandoned the principles of the International Monetary Fund that were supposed to have worked with a purely capitalistic system.
(d) They abandoned the free market principles that were supposed to have worked with a purely capitalistic system.

2. What was a fundamental flaw in a paper money system not backed by gold?
(a) The temptation was too strong to simply print more money which led to severe deflation.
(b) The temptation was too strong to simply print more money which led to economic stability.
(c) The temptation was too strong to simply print more money which led to economic instability.
(d) The temptation was too strong to simply print more money which led to severe inflation.

3. How did the Federal Reserve System accomplish the nationalization of banks?
(a) The politics of the Federal Reserve System became new and inventive ways to justify the nationalization of banks through the use of risky loans.
(b) The politics of the Federal Reserve System became new and inventive ways to justify the nationalization of banks through the use of new legislation.
(c) The politics of the Federal Reserve System became new and inventive ways to justify the nationalization of banks through the use of short-term loans.
(d) The politics of the Federal Reserve System became new and inventive ways to justify the nationalization of banks through the use of bailouts.

4. How was the nationalization of banks justified?
(a) Nationalization was necessary for the nation's standing in the world.
(b) Nationalization was necessary for the banking industry.
(c) Nationalization was necessary for the public good.
(d) Nationalization was necessary for the IMF.

5. What occurred when coinage was weakened through lower percentages of precious metal or completing stripped of such backing?
(a) Paper money was seen to be the superior monetary system when the coinage was debased through lower percentages of precious metal or none at all.
(b) Inflation and political turmoil occurred when the coinage was debased through lower percentages of precious metal or none at all.
(c) Deflation resulted when the coinage was debased through lower percentages of precious metal or none at all.
(d) Stock market instability occurred when the coinage was debased through lower percentages of precious metal or none at all.

Short Answer Questions

1. What happened to many homeowners when the housing market bubble burst?

2. Why has bank fraud never been eliminated?

3. During the history of the world, what types of things were first traded?

4. What impact did the Greek currency system have on the economy?

5. What major banks failed in 1972?

Short Essay Questions

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

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

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

4. In Chapter 1, how is a "currency drain" defined?

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

6. In Chapter 3, what was the result of the 1970 Penn Central Railroad bailout?

7. In Chapter 4, what factdors may have contributed to the problems of the S&Ls in the 1980s?

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

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

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

(see the answer keys)

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