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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 platinum not used to back the monetary system?
(a) Not enough platinum occurred in the United States to be used as the standard for a monetary system.
(b) There were myths about platinum and many questioned its real value making it unacceptable to be used to be the standard for a monetary system.
(c) Platinum was too scarce to be used to be the standard for a monetary system.
(d) Platinum did not have the popular support of the public to become the standard for a monetary system.

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

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

4. How did the government provide economic support to Lockheed Corporation in 1970?
(a) In 1970, Lockheed Corporation was made a unit of the Defense Department.
(b) In 1970, the US government agreed to pay Lockheed Corporation twenty-percent over their selling prices.
(c) In 1970, Lockheed Corporation was forgiven of all defense-related debt.
(d) In 1970, Lockheed Corporation had troubles and became a prime government contractor, another way of nationalizing private industry.

5. What is the definition of a public run on a bank?
(a) A public run was when many depositors demanded their cash from a bank and wiped out the bank's reserves.
(b) A public run occurs when the Federal government takes ownership of a bank.
(c) A public run occurs when a bank runs out of cash.
(d) A public run is when the government puts a bank up for sale.

Short Answer Questions

1. Why did banks make risky loans?

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

3. What impacted housing prices in the Midwest states?

4. When were the International Monetary Fund and World Bank established?

5. Why was gold considered the ideal metal behind a monetary system?

Short Essay Questions

1. In Chapter 2, how did the author characterize the problems with the banking system?

2. According to Chapter 6, how did the new world order develop?

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

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

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

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

7. According to Chapter 4, what caused the Savings & Loan crisis of the 1980s?

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

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

10. According to Chapter 3, what was the result of the first electronic run on banks in 1983?

(see the answer keys)

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