Question 1

What best describes the US experience with banking from 1785 until the Civil War?

Accepted Answer

A) There was a national bank for the entire time period. 
B) The first two national banks were largely foreign owned. 
C) Only gold was used to back currency. 
D) Only national banks could print notes. 
A) There was a national bank for the entire time period. 
B) The first two national banks were largely foreign owned. 
C) Only gold was used to back currency. 
D) Only national banks could print notes. B

Question 2

Which of the following antebellum banking innovations was the forerunner of the modern Federal Deposit Insurance Corporation (FDIC)?

Accepted Answer

A) the Suffolk System 
B) the Safety Fund Act 
C) the Forstall System 
D) the bimetallic standard 
A) the Suffolk System 
B) the Safety Fund Act 
C) the Forstall System 
D) the bimetallic standard B

Question 3

If the market ratio of silver to gold is 16 to 1 and the mint ratio is 15 to 1,

Accepted Answer

A) people will cease to use gold and silver as money. 
B) the Treasury will be forced to issue paper money. 
C) gold is undervalued at the mint. 
D) silver is undervalued at the mint. 
A) people will cease to use gold and silver as money. 
B) the Treasury will be forced to issue paper money. 
C) gold is undervalued at the mint. 
D) silver is undervalued at the mint. C

Question 4

Thomas Jefferson argued that the U.S.should adopt the Spanish dollar as the official unit of account because

Accepted Answer

A) so many colonists came from Spanish-speaking nations. 
B) it was based on the decimal system. 
C) it was less prone to inflation than other units of account. 
D) it was the unit of account used in most European countries. 
A) so many colonists came from Spanish-speaking nations. 
B) it was based on the decimal system. 
C) it was less prone to inflation than other units of account. 
D) it was the unit of account used in most European countries.

Question 5

In the 1850s,the proportion of silver in the currency supply fell,and the proportion of gold rose.This is an illustration of

Accepted Answer

A) the quantity theory of money. 
B) Gresham's law. 
C) Say's law. 
D) the Walrasian auctioneer. 
E) it violates every known law of economics. 
A) the quantity theory of money. 
B) Gresham's law. 
C) Say's law. 
D) the Walrasian auctioneer. 
E) it violates every known law of economics.

Question 6

The Bank of the United States did not

Accepted Answer

A) act as a lender of last resort. 
B) help collect customs bonds. 
C) carry on foreign exchange operations. 
D) hold most of the U.S.Treasury deposits. 
E) The Bank of the United States engaged in all of these activities. 
A) act as a lender of last resort. 
B) help collect customs bonds. 
C) carry on foreign exchange operations. 
D) hold most of the U.S.Treasury deposits. 
E) The Bank of the United States engaged in all of these activities.

Question 7

Wall Street bankers opposed the Second Bank of the United States.Their opposition was based on the idea that the Second Bank

Accepted Answer

A) lent too freely to the federal government. 
B) followed a monetary policy that favored stable prices even at the cost of a slower growing economy. 
C) followed a monetary policy that kept interest rates too high. 
D) favored Philadelphia because that was where the head office of the bank was located. 
A) lent too freely to the federal government. 
B) followed a monetary policy that favored stable prices even at the cost of a slower growing economy. 
C) followed a monetary policy that kept interest rates too high. 
D) favored Philadelphia because that was where the head office of the bank was located.

Question 8

According to Gresham's Law,

Accepted Answer

A) inflation and unemployment are inversely related. 
B) tax rates and tax revenues are inversely related. 
C) bad money drives out good money. 
D) inflation is inevitable in the long run. 
A) inflation and unemployment are inversely related. 
B) tax rates and tax revenues are inversely related. 
C) bad money drives out good money. 
D) inflation is inevitable in the long run.

Question 9

Which was not a result of the California gold rush?

Accepted Answer

A) A substantial increase in the money supply. 
B) A large increase in GNP. 
C) A significant decrease in the prices of farm goods. 
A) A substantial increase in the money supply. 
B) A large increase in GNP. 
C) A significant decrease in the prices of farm goods.

Question 10

The Forstall System was the antebellum banking regulation in

Accepted Answer

A) New England. 
B) The old Northwest (Ohio,Indiana,Illinois,and neighboring states). 
C) New York State. 
D) Louisiana. 
A) New England. 
B) The old Northwest (Ohio,Indiana,Illinois,and neighboring states). 
C) New York State. 
D) Louisiana.

Question 11

The charter of the Bank of the United States was not renewed in 1811 in part because

Accepted Answer

A) Thomas Jefferson,who was president at the time,believed it to be unconstitutional. 
B) of years of general instability in the value of currency. 
C) of instability and uncertainty in the expansion of credit. 
D) of fears of foreign ownership and manipulation. 
A) Thomas Jefferson,who was president at the time,believed it to be unconstitutional. 
B) of years of general instability in the value of currency. 
C) of instability and uncertainty in the expansion of credit. 
D) of fears of foreign ownership and manipulation.

Question 12

According to Hume's price-specie-flow mechanism,a sudden increase in the money stock of Country A will

Accepted Answer

A) cause an immediate deflation in Country A. 
B) lead to an increase in Country A's imports relative to its exports. 
C) lead to an increase in Country A's exports relative to its imports. 
D) cause specie from the rest of the world to flow into Country A. 
A) cause an immediate deflation in Country A. 
B) lead to an increase in Country A's imports relative to its exports. 
C) lead to an increase in Country A's exports relative to its imports. 
D) cause specie from the rest of the world to flow into Country A.

Question 13

In the mid-1830s,the U.S.entered an inflationary period that culminated in the depression of 1839-1843.Contemporary economic historians attribute this economic downturn to

Accepted Answer

A) the demise of the Second Bank of the U.S.in 1832. 
B) over-issue of gold coins by the U.S.Mint. 
C) over-expansion by the manufacturing sector. 
D) external forces,including large inflows of specie from Mexico and Europe. 
A) the demise of the Second Bank of the U.S.in 1832. 
B) over-issue of gold coins by the U.S.Mint. 
C) over-expansion by the manufacturing sector. 
D) external forces,including large inflows of specie from Mexico and Europe.

Question 14

What is typically not considered a characteristic of a central bank?

Accepted Answer

A) The bank backs its currency with gold or silver. 
B) The bank has considerable control over the stock of money and uses this control to moderate fluctuations in credit conditions and prices. 
C) The bank regulates other banks. 
D) The bank lends a lot of money to the government. 
E) The bank serves as a lender of last resort to other banks by lending them money when no one else will. 
A) The bank backs its currency with gold or silver. 
B) The bank has considerable control over the stock of money and uses this control to moderate fluctuations in credit conditions and prices. 
C) The bank regulates other banks. 
D) The bank lends a lot of money to the government. 
E) The bank serves as a lender of last resort to other banks by lending them money when no one else will.

Question 15

States that developed successful and sound commercial banking systems in the antebellum period included all of the following except

Accepted Answer

A) New York. 
B) Ohio. 
C) Michigan. 
D) Louisiana. 
A) New York. 
B) Ohio. 
C) Michigan. 
D) Louisiana.

Question 16

Gresham's Law

Accepted Answer

A) applies only to bimetalism issues. 
B) applies only to monetary issues in general. 
C) applies to a wide variety of situations. 
D) is only understood after taking graduate-level courses. 
A) applies only to bimetalism issues. 
B) applies only to monetary issues in general. 
C) applies to a wide variety of situations. 
D) is only understood after taking graduate-level courses.

Question 17

What was not one of the primary reasons why people opposed the First and Second Banks of the United States?

Accepted Answer

A) They printed too much money and triggered a substantial inflation. 
B) They had monopoly control over some banking activities. 
C) They were unconstitutional. 
D) They did not provide sufficiently generous lending policies. 
A) They printed too much money and triggered a substantial inflation. 
B) They had monopoly control over some banking activities. 
C) They were unconstitutional. 
D) They did not provide sufficiently generous lending policies.

Question 18

The Coinage Act of 1792

Accepted Answer

A) designated both gold and silver as the monetary standard for the U.S. 
B) designated gold as the monetary standard for the U.S. 
C) designated silver as the monetary standard for the U.S. 
D) designated paper Treasury notes as the monetary standard for the U.S. 
A) designated both gold and silver as the monetary standard for the U.S. 
B) designated gold as the monetary standard for the U.S. 
C) designated silver as the monetary standard for the U.S. 
D) designated paper Treasury notes as the monetary standard for the U.S.

Question 19

Under the bimetallic standard of the 19ᵗʰ century

Accepted Answer

A) the amount of money in circulation increased. 
B) the American dollar served poorly as a unit of account. 
C) only one metal tended to circulate as money at any given time. 
D) the government earned profits by selling gold. 
A) the amount of money in circulation increased. 
B) the American dollar served poorly as a unit of account. 
C) only one metal tended to circulate as money at any given time. 
D) the government earned profits by selling gold.

Question 20

The Second Bank of the United States rose to prominence under the leadership of

Accepted Answer

A) Alexander Hamilton. 
B) Andrew Jackson. 
C) Henry Clay. 
D) Nicholas Biddle. 
A) Alexander Hamilton. 
B) Andrew Jackson. 
C) Henry Clay. 
D) Nicholas Biddle.

Exam 12: Money and Banking in the Developing Economy

What best describes the US experience with banking from 1785 until the Civil War?

Which of the following antebellum banking innovations was the forerunner of the modern Federal Deposit Insurance Corporation (FDIC)?

If the market ratio of silver to gold is 16 to 1 and the mint ratio is 15 to 1,

Thomas Jefferson argued that the U.S.should adopt the Spanish dollar as the official unit of account because

In the 1850s,the proportion of silver in the currency supply fell,and the proportion of gold rose.This is an illustration of

The Bank of the United States did not

Wall Street bankers opposed the Second Bank of the United States.Their opposition was based on the idea that the Second Bank

According to Gresham's Law,

Which was not a result of the California gold rush?

The Forstall System was the antebellum banking regulation in

The charter of the Bank of the United States was not renewed in 1811 in part because

According to Hume's price-specie-flow mechanism,a sudden increase in the money stock of Country A will

In the mid-1830s,the U.S.entered an inflationary period that culminated in the depression of 1839-1843.Contemporary economic historians attribute this economic downturn to

What is typically not considered a characteristic of a central bank?

States that developed successful and sound commercial banking systems in the antebellum period included all of the following except

Gresham's Law

What was not one of the primary reasons why people opposed the First and Second Banks of the United States?

The Coinage Act of 1792

Under the bimetallic standard of the 19ᵗʰ century

The Second Bank of the United States rose to prominence under the leadership of

Economic History

Founding the Colonies

Colonial Economic Activities

The Economic Relations of the Colonies

Economic Progress and Wealth

Three Crises and Revolt

Hard Realities for a New Nation

Land and the Early Western Movements

Transportation and Market Growth

Market Expansion Industry in First Transition

Labor During the Early Industrial Period

The Entrenchment of Slavery and Regional Conflict

War, Recovery and Regional Divergence

Agricultures Western Advance

Railroads and Economic Change

Industrial Expansion and Concentration

The Emergence of Americas Labor Consciousness

Money, Prices, and Finance in the Postbellum ERA

Commerce at Home and Abroad

Mobilizing for War

The Roaring Twenties

The Great Depression

The New Deal

World War II

The Changing Role of the Federal Government

Government the Business Cycle After World War II

Manufacturing, Productivity, and Labor

Achievements of the Past, Challenges for the Future

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