Deck 22: The Command Economy Emerges: World War I

Question 1

In 1921,prices surged,causing a decrease in average real wages.

Answer 1

False

Question 2

The income tax levied during the Civil War (1861-65)was declared constitutional in Springer v ?U.S.(1881)because it was not a direct tax.

Answer 2

True

Question 3

Wartime inflation occurs when war requires a country to shift resources away from efficient uses into war-related production.

Answer 3

True

Question 4

World War I (1914-18)caused inflation because

A) war production stressed an economy already operating ?close to full employment.
B) fiscal policy mandated it.
C) the Federal Reserve System required it.
D) inflation always occurs in times of war.

Question 5

For the first time since the Civil War (1861-65),laborers were forced into active military service during World War I (1914-18).

Question 6

According to Hughes and Cain (2011),taxation can be a form of forcible seizure of property,under certain circumstances.

Question 7

The reason food prices rose so little in 1916-19 was the extraordinary increase in output from the nation's farms.

Question 8

Taxes impact incentives to use resources since they distort relative prices.

Question 9

How did laborers benefit from World War I (1914-18)?

A) Their nominal take-home pay rose more than prices increased.
B) They were placed in military jobs that paid wages higher than ?private sector jobs.
C) High-paying jobs in the private sector were created to support ?the war effort.
D) Real GNP and national income fell during and shortly after the war.

Question 10

Unlike business,government can coerce individuals to paying higher prices through taxes.

Question 11

The American Revolution,the Civil War (1861-65)and World War I (1914-18)

A) diverted U.S. resources from peace-time, private uses and toward war-related uses.
B) encouraged the efficient allocation of resources.
C) increased long-term investment opportunities.
D) resulted in the excessive contraction of money to finance war efforts.

Question 12

During World War I (1914-18),national debt soared,leading to

A) money creation and inflation.
B) money creation and deflation.
C) money destruction and inflation.
D) money destruction and deflation.

Question 13

Which of the following occurred during World War I (1914-18)?

A) Private markets largely influenced resource allocation.
B) Non-market controls imposed by the government.
C) New income taxes financed 100 percent of the war.
D) Corporate America voluntarily financed 100 percent of the war ?efforts to protect their interests.

Question 14

A government runs a deficit when its government revenues exceed expenditures.

Question 15

Article I,Section 8,clause I of the federal Constitution requires that all "Duties,Imposts,and Excises shall be uniform throughout the United States." Hence,the Sixteenth Amendment to the U.S.Constitution (1913)was needed to grant constitutionality to the unequal taxation of land,its products and income.

Question 16

What was the primary reason the Income Tax Amendment of 1913 was passed?

A) To pay off the public debt accumulated during the Civil War (1861-65)
B) To pay off the public debt accumulated during World War II (1941-45)
C) To grant the federal government access to revenues beyond those from land sales, ?customs and excise taxes
D) To pay off the current account deficit

Question 17

The average number of weekly hours worked in manufacturing began to decline during?World War I (1914-18).

Question 18

Following the war-time prosperity for capital and the rich during World War I (1914-18),income distribution trended towards greater equality when peace came and market forces replaced the economy's wartime concerns in determining income distribution.

Question 19

During the 1915-1919 fiscal years,income tax revenues comprised approximately 53% of total federal revenues.Today,over 80% of total tax revenues are raised through income taxes.

Question 20

As the U.S.economy expanded and entered the 20th century,its federal government's need for renewable revenue sources grew.Expenditures significantly increased for all of the following ?reasons except

A) Military
B) Expanding regulatory agencies
C) Public works, education and sanitation
D) Foreign interventionism

Question 21

Which of the following World War I (1914-18)institutions reappeared in various forms during the Great Depression and/or World War II (1941-45)?

A) The U.S. Grain Corporation
B) The War Industries Board
C) The United States Housing Corporation
D) All of the above

Question 22

The government has used a variety of methods of financing wars.Discuss the methods used in the Revolutionary War,the Civil War (1861-65)for both sides,and World War I (1914-18),and whether they enabled the government to achieve its long-term and short-term goals.Who were the winners and losers of the government's policies both during and after the war?

Question 23

Explain the relationship between World War I (1914-18)and post-war inflation.

Question 24

During World War I (1914-18),hourly wages

A) decreased in nominal and real terms.
B) increased in nominal and real terms.
C) increased in nominal terms but decreased in real terms.
D) decreased in nominal terms but increased in real terms.

Question 25

Under the Gold Standard (1880-1913)gold would flow into the U.S.when

A) U.S. exports exceeded its imports.
B) U.S. imports exceeded its exports.
C) domestic demand grew faster than domestic supply.
D) domestic supply grew faster than domestic demand.

Question 26

Which group came out of World War I (1914-18)better off?

A) Industrial and agricultural workers
B) Creditors
C) Individuals depending on investment
D) People living on fixed incomes

Question 27

What did the Lever Food Control Act of 1917 give the U.S.federal government the power to do?

A) Take over factories during periods of war
B) Inspect meat-packing plants and control the quality of ?work completed
C) Buy, sell and distribute food during times of peace
D) Seize Congressional control over food-related production

Question 28

During World War I (1914-18),the government did not have to rely on which one of the following reallocation devices?

A) Inflation
B) Taxes
C) Borrowing
D) Rationing

Question 29

During World War I (1914-18),the U.S.combined the needs of defense with social reform.In addition to implementing minimum wage laws,discuss some of the other labor reforms emerging during this historical period.

Question 30

Taxes can have different effects on different income groups.Which type of tax takes a larger percentage of income from high-income groups than from low-income groups?

A) Progressive
B) Regressive
C) Proportional
D) Flat
E) Protective

Question 31

Marxists claim that "capitalists start wars to maintain their class interests; they seem to have chosen?a poor vehicle." Explain why World War I (1914-18)experiences counter this claim.

Question 32

The command economy of World War I (1914-18)possessed which of the following traits?

A) Decentralized decision-making in the markets
B) The creation of many state agencies
C) Volunteers for the armed forces
D) Centralized decision making by bureaucrats

Question 33

During World War I (1914-18),the government supported the cause of labor when it

A) reduced the work day to eight hours in all government jobs.
B) reduced the work day to eight hours in all private sector jobs.
C) enforced the eight-hour work day in all government jobs.
D) enforced the eight-hour work day in all private jobs.

Question 34

Once wartime spending is under way and production is diverted away from household consumption items and private investment goods,

A) real Gross National Product will likely fall.
B) the money supply will automatically increase.
C) inflation will likely rear its ugly head if productivity ?does not advance.
D) production and employment will fall.

Question 35

Describe the economic and political reasoning behind the Income Tax Amendment of 1913.Why do taxes distort prices? Describe the secondary effects of taxes on private consumption and production.

Question 36

Taxes provide individuals with incentive to:

A) Increase the number of working hours.
B) Increase productivity by working longer and harder.
C) Direct resources to uses where taxes are relatively low or nonexistent.
D) Buy and save more.

Question 37

Discuss the opportunity costs of war-related labor allocation and output production during World War I (1914-18).

Question 38

What do taxes do?

A) Impact the incentive to use resources efficiently
B) Transfer income from the person or entity paying taxes to ?other individuals or entities
C) Affect the relative prices of goods, services and resources
D) All of the above

Question 39

Discuss the importance of the Lever Food Act of 1917 in economic history.Using economic reasoning,explain the inefficiencies associated with some of the price-setting policies of this Act.

Question 40

President Woodrow Wilson

A) fostered the growth of government bureaucracy.
B) quickly returned the U.S. economy to a competitive market place.
C) remained neutral on the issue of whether the federal government ?should intervene in private market affairs.
D) mandated that Congress operate with a balanced budget.

Question 41

Discuss the net economic benefits of World War I (1914-18).Were they positive or negative? Defend your position using the work of notable economic historians and economic data.

Question 42

Explain the shift in government support for unions during and immediately after World War I ?(1914-18).

Question 43

Describe some of the World War I (1914-18)(WWI)institutions that reappeared during the Great Depression and World War II (1941-45).What purposes did they serve? Did they disappear in the same fashion as their WWI predecessors?