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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 has caused the economy's boom-bust cycle?
(a) The Federal Reserve's advertised purpose was to stabilize the economy, but depressions and recessions have resulted instead in a boom-bust cycle.
(b) The economy's boom-bust cycle is caused from trade deficits.
(c) The economy's boom-bust cycle is caused from people hoarding cash.
(d) The economy's boom-bust cycle is caused by the instability of the International Monetary Fund.

2. What happened when a debtor defaulted on a loan?
(a) When a debtor defaulted on a loan, he would ask loan payments be waived.
(b) When a debtor defaulted on a loan, he would first ask for more time to pay.
(c) When a debtor defaulted on a loan, he would stop making payments.
(d) When a debtor defaulted on a loan, he would ask the government for a guaranteed loan.

3. What culture was the first to create a currency system based on gold and silver?
(a) Alexander the Great came up with the idea to make coins out of gold and silver.
(b) The British came up with the idea to make coins out of gold and silver.
(c) The ancient Greeks came up with the idea to make coins out of gold and silver.
(d) The ancient Romans came up with the idea to make coins out of gold and silver.

4. Why has bank fraud never been eliminated?
(a) The Federal Reserve was influenced by lobbyists who advocated fraudulent regulations.
(b) The Federal Reserve tried to institute European standards which led to the perpetuation of fraud.
(c) Financial experts were taught that the way banking worked in the US was the only way it could work, and so the fraud kept on going.
(d) The Federal Reserve was controlled by outside political interests that fostered fraud.

5. What happened when Congress stepped in during the S&L crisis?
(a) When Congress did step in, it forced the S&Ls to sell all their assets.
(b) When Congress did step in, it forced the S&Ls to sell off all their junk bond holdings.
(c) When Congress did step in, it forced the S&Ls to refund depositors at fifty percent.
(d) When Congress did step in, it forced the S&Ls to make their holdings public.

Short Answer Questions

1. Since its inception in 1910, the Federal Reserve had made what decisions about bank bailouts?

2. What is the true function of the FDIC?

3. When did the American public become interested in socialism as an alternative to capitalism?

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

5. What caused the Savings & Loan crisis of the 1980s?

Short Essay Questions

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

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

3. According to Chapter 3, the nationalization of banks is more likely to occur under conservative or liberal administrations?

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

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

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

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

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

9. According to Chapter 1, what did over-lending by banks result in?

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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