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This quiz consists of 5 multiple choice and 5 short answer questions through Section II. A Crash Course on Money, Chapters 9-10 The Secret Science; The Mandrake Mechanism.

Multiple Choice Questions

1. Why did banks offer debtors more credit?
(a) Banks offered more credit to debtors to help them purchase homes.
(b) Banks offered more credit to debtors to help improve their credit rating.
(c) Banks offered more credit to debtors to so they could increase their purchasing power.
(d) Banks offered more credit to debtors to increase interest payments to the them.

2. What events cause deflation?
(a) Deflation occurs when the government takes steps against inflationary signals.
(b) Deflation occurs when the stock market suddenly tumble.
(c) Deflation occurs when prices suddenly increase.
(d) Deflation occurs when prices suddenly tumble.

3. What occurred when coinage was weakened through lower percentages of precious metal or completing stripped of such backing?
(a) Deflation resulted when the coinage was debased through lower percentages of precious metal or none at all.
(b) 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.
(c) Stock market instability occurred when the coinage was debased through lower percentages of precious metal or none at all.
(d) Inflation and political turmoil occurred when the coinage was debased through lower percentages of precious metal or none at all.

4. 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 inflation.
(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 severe deflation.
(d) The temptation was too strong to simply print more money which led to economic instability.

5. What impact does deflation have on individuals who are repaying loans?
(a) Deflation causes people to repay more value on loans taken out during inflationary times.
(b) Deflation causes people to repay more value on loans taken out during a bull market.
(c) Deflation causes people to repay more value on loans during an economic downturn.
(d) Deflation causes people to repay more value on loans taken out during a bear market.

Short Answer Questions

1. What is the basic structure of the U.S. monetary system?

2. Why was platinum not used to back the monetary system?

3. What culture was the first to create a currency system based on gold and silver?

4. What is the main transport of both Amtrak and Conrail?

5. In what year was First Pennsylvania Bank bailed out?

(see the answer key)

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