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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

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

2. What type of person was Paul Moritz Warburg?
(a) Paul Moritz Warburg was a stubborn man concerned only with the wealth of the upper class.
(b) Paul Moritz Warburg was an elitist who was not concerned with the concerns of the poor.
(c) Paul Moritz Warburg was a rude and greedy man.
(d) Paul Moritz Warburg was a mild-mannered, shy and sensitive man.

3. What did the issuance of the first paper money lead to?
(a) Stronger economies evolved from the establishment of the paper money system.
(b) Banks evolved from the establishment of the paper money system.
(c) The lending process evolved from the establishment of the paper money system.
(d) The class system evolved from the establishment of the paper money system.

4. Why was there skepticism about the author's analysis?
(a) Doubt existed because the author's entire analysis was an exercise in historical analysis from subsequent events, which is by nature flawed due to the guesswork involved.
(b) The author was not considered an expert on the subject.
(c) The author was found to be a lobbyist for conservative causes.
(d) The author refused to be questioned about his research.

5. What new way of home ownership emerged in the 1980s?
(a) The government incentivized buyers to buy foreclosed upon homes.
(b) A government sponsored home buyer's savings program was established.
(c) Condominiums became a new way to buy a home.
(d) Housing co-ops became another way to buy a home.

6. How did the New World Order develop?
(a) The New World Order was an outgrowth of the international events that led up to the Great Depression of 1929.
(b) The New World Order was an outgrowth of the international events that led up to the fall of Communism, specifically the dissolution of the USSR.
(c) The New World Order was an outgrowth of the international events that led to the defeat of the Axis powers in World War II.
(d) The New World Order was an outgrowth of the international events that led up to the fall of Nazism, specifically the defeat of Nazi Germany.

7. Why did banks ask for interest-only payments?
(a) The bank would arrange for interest payments only to take the burden off the customer.
(b) The bank would arrange for interest payments only so that their customers could keep a good credit rating>
(c) The bank would arrange for interest payments only to keep the loan viable.
(d) The bank would arrange for interest payments only to keep the profits coming in.

8. 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) The Federal Reserve was controlled by outside political interests that fostered fraud.
(d) 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.

9. 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 ask the government for a guaranteed loan.
(d) When a debtor defaulted on a loan, he would stop making payments.

10. How did the development of paper money begin?
(a) The development of paper money started out as vouchers issued by the government.
(b) The development of paper money started out as simply receipts issued by goldsmiths who were the first banks.
(c) The development of paper money started out as simply receipts issued by goldsmiths who gave the people's gold coins to the government.
(d) The development of paper money started out as simply receipts issued by goldsmiths who kept other people's gold coins in their vaults.

11. The nationalization of banks has occurred during conservative or liberal administrations?
(a) The nationalization of banks occurred during liberal administrations.
(b) The nationalization of banks occurred when there is equal balance among all branches of government.
(c) The nationalization of banks occurred during conservative administrations.
(d) The nationalization of banks occurred during conservative as well as liberal administrations.

12. Why was housing becoming difficult to obtain in the 1980s?
(a) Wages were not keeping up with inflation, which made housing harder to obtain.
(b) The construction industry was experiencing labor conflicts.
(c) Congressional actions began to place restrictive regulations on house buying.
(d) The cost of housing was sky-rocketing.

13. Why did all nations become socialistic in the New World Order?
(a) In the New World Order, all nations became socialistic through United Nations declaration.
(b) In the New World Order, all nations became socialistic as a result of the abandonment of the gold standard.
(c) In the New World Order, all nations became socialistic through deficit loan practices.
(d) In the New World Order, all nations became socialistic through the use of the IMF and direct loans from the industrialized nations to the undeveloped nations.

14. What caused the Savings & Loan crisis of the 1980s?
(a) The Savings and Loan or S&L crisis of the 1980s happened because the government tried to insure the deposits, but the funds to do this were not adequate.
(b) The Savings and Loan or S&L crisis of the 1980s happened because the government tried to insure the deposits, but the funds were tied up in bank bailouts.
(c) The Savings and Loan or S&L crisis of the 1980s happened because the government tried to insure the deposits, but the funds were not made available by Congress.
(d) The Savings and Loan or S&L crisis of the 1980s happened because the government tried to insure the deposits but the president vetoed the legislation that was necessary to carry out the plan.

15. What do many people feel was the real reason behind the establishment of the Federal Reserve?
(a) Many feel that the real reason for creating the Federal Reserve was to keep poor people from turning to crime.
(b) Many feel that the real reason for creating the Federal Reserve was to keep the middle class from failing.
(c) Many feel that the real reason for creating the Federal Reserve was to keep rich people in power.
(d) Many feel that the real reason for creating the Federal Reserve was to keep the rich from becoming too powerful.

Short Answer Questions

1. What risky loan activities have banks participated in?

2. What impacted housing prices in the Midwest states?

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

4. What did the Federal Reserve System help banks to do?

5. What did the author argue resulted from the establishment of the IMF and World Bank and the abandonment of the gold standard?

(see the answer keys)

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