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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 organization ensures the nationalization of banks?
(a) As long as the Congressional Banking Committee existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(b) As long as the Federal Reserve System existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(c) As long as the FDIC existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.
(d) As long as the International Monetary Fund existed, it would continue nationalizing banks and perhaps other industries as they fell into financial difficulties.

2. What city became a major part of the welfare state in 1975?
(a) New York City became a major part of the welfare state in 1975 via Federal government bailouts.
(b) Los Angeles became a major part of the welfare state in 1975 via Federal government bailouts.
(c) Chicago became a major part of the welfare state in 1975 via Federal government bailouts.
(d) Atlanta became a major part of the welfare state in 1975 via Federal government bailouts.

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

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

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

Short Answer Questions

1. How did the Federal Reserve System accomplish the nationalization of banks?

2. Some tactics include cherry-picking examples while oversimplifying causes.

3. What do many people feel was the real reason behind the establishment of the Federal Reserve?

4. Why did banks make risky loans?

5. What monetary system did the Constitution of the newly formed United States require?

Short Essay Questions

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

2. According to Chapter 1, where did the idea for the Federal Reserve System originate?

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

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

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

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

7. According to Chapter 1, what were banks allowed to lend prior to the establishment of the Federal Reserve System?

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

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

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

(see the answer keys)

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