Deck 19: Money, Prices, and Finance in the Postbellum ERA

Question 1

Americans who supported William Jennings Bryan and the "Free Silver" movement

A)advocated a reduction in the U.S.money supply.
B)included the US Secretary of the Treasury.
C)wanted to increase the U.S.price level.
D)wanted free railroad transport of silver from western mines to the east.

Answer 1

wanted to increase the U.S.price level.

Question 2

During the Civil War,inflation caused U.S.prices to rise by roughly

A)12 percent.
B)32 percent.
C)54 percent.
D)76 percent.

Answer 2

76 percent.

Question 3

Most of the increase in total money supply between 1860 and 1920 was due to

A)an increase in national bank notes.
B)the growth of bank deposits.
C)an increase in greenbacks.
D)new discoveries of gold and silver.

Answer 3

an increase in greenbacks.

Question 4

One important issue in the post-bellum currency debate concerned the coinage of silver by the federal government.Which of the following statements presents accurate information regarding the silver debate?

A)Silver circulated widely as money in the years immediately prior to the Coinage Act of 1873.
B)The Bland-Allison Act allowed for the Treasury to make limited monthly silver purchases at the market price.
C)Silver never circulated as money in the U.S.after 1873;however,it was used as a unit of account.
D)Congress passed the Coinage Act in 1873 despite widespread public opposition to this legislation at the time.

Question 5

Market barriers imposed on national banks

A)included both restrictions on mortgages and high capital requirements.
B)allowed rural banks to charge higher rates.
C)allowed national banks to price discriminate.
D)All of the above are correct.
E) Only a and b are correct.

Question 6

Between the years 1879 and 1900 America was on a de facto gold standard.Which of the following statements is not true about the 20-year period that preceded these years?

A)The nominal money supply grew faster than the population growth rate.
B)A policy of money contraction was initiated that caused deflation.
C)There existed efforts to resume an exchange of one dollar in greenbacks to one dollar in gold.
D)Resumption of the gold standard threatened to reduce the stock of gold because of relatively cheaper foreign goods.

Question 7

During the post-Civil War debate over resuming the exchange of gold for greenbacks,

A)members of the Greenback party argued the returning to gold was not worth the economic pain.
B)Republicans argued that those who had loaned money to the government during the Civil War had the right to be paid in gold.
C)Republican argued that due to the Public Credit Act of 1869,bondholders were not required to be paid in gold.
D)None of the above is correct.
E) Only a and b are correct.

Question 8

The Federal Reserve Act

A)established a clearinghouse system for checks and notes.
B)allowed only nationally-chartered banks to become members of the Federal Reserve system.
C)allowed the Fed District Banks to offer commercial loans to private businesses at reduced interest rates.
D)required that all Fed District Bank directors be associated with the commercial banking industry.
E)all of the above.

Question 9

Following the Civil War,U.S.forms of money included all of the following except:

A)wooden nickels.
B)checks.
C)state bank notes.
D)greenbacks.

Question 10

Which of the following statements most accurately describes the role of banks in the United States between the Civil War and WWI?

A)The U.S. ,which had the largest economy in the world,also had the largest banks in the world.
B)Banking reforms increased the ability of state banks to issue their own notes.
C)Compared to state banks,national banks generally had higher reserve requirements and more restrictions on how they could handle their assets.
D)Those who borrowed money at fixed interest rates gain significantly during deflationary periods.

Question 11

When the Coinage Act of 1873 was passed,silver was worth _________ on the market than at the mint;however,subsequent __________ in the supply of silver led to public outcry over the "demonetization" of silver under the Act.

A)less;decreases
B)less;increases
C)more;decreases
D)more;increases

Question 12

Deflation

A)often accompanies increases in the money supply.
B)is good for borrowers,but bad for lenders.
C)is good for lenders,but bad for borrowers.
D)cannot occur under a bimetallic standard.

Question 13

Provisions of the National Bank Act of 1863 included all of the following except

A)mandated legal reserve requirements for banks chartered under the Act.
B)the requirement that banks chartered under the Act purchase a certain amount of US government bonds.
C)the creation of a currency with a standard design.
D)the creation of a central bank responsible for serving as a lender of last resort and an overseer of the money supply.

Question 14

It has been argued that banks tended not to take full advantage of issuing notes,thereby passing up potential profits because

A)the profit amounts were small.
B)they were not the types of profits conservative bankers wanted to pursue.
C)regulations and opportunity costs involved with the issuance itself limited the profits.
D)All of the above are correct.
E) Only a and c are correct.

Question 15

In the election of 1896,supporters of William McKinley included all of the following except

A)advocates for the gold standard.
B)voters opposed to high tariffs.
C)industrial employers in the East.
D)Republicans.

Question 16

In the late 1800s,problems with the U.S.banking system included

A)uneven distribution of notes throughout the country.
B)varied banking regulations across states.
C)the use of "country bank" reserves to support call loans made by larger urban banks.
D)the tendency of commercial banks to reduce money and credit during recessions.
E)All of the above.

Question 17

Persistent U.S.deflation between 1879 and the mid-1890s was primarily due to the fact that the ___________ was growing faster than the _________.

A)supply of money;demand for money
B)demand for money;supply of money
C)demand for money;demand for goods
D)demand for goods;supply of money

Question 18

The years between 1896 and World War I were characterized by

A)rapidly rising prices in the U.S.
B)wild fluctuations in international exchange rates.
C)the "heyday" of the gold standard in the U.S.and most industrialized countries.
D)barriers that prevented the flow of goods and capital across international borders.
E) All of the above.

Question 19

In 1865,Congress raised the tax on state bank notes to 10 percent of the value of notes in circulation.This tax

A)ended the dual banking system in the U.S.
B)was less than the tax on national bank notes.
C)was rescinded in 1870.
D)was avoided through the use of demand deposits.

Question 20

The "greenback"

A)provided a uniform currency across the U.S.
B)provided additional revenue for the government during the Civil War.
C)supplied monetary increases that sent prices skyrocketing.
D)All of the above are correct.
E) Only a and b are correct.

Question 21

In accordance with the "Fisher effect,"

A)farmers with mortgages could benefit from inflation.
B)expectation of inflation could trigger higher interest rates for mortgages.
C)if silver inflation was expected,farmers could command lower interest rates when renewing a mortgage.
D)All of the above are correct.
E) Only a and b are correct.

Question 22

Which of the following most accurately describes the "Fisher effect?"

A)Interest rates increase after inflation and decrease after deflation,but with a long lag.
B)Interest rates are independent of inflation and deflation.
C)Interest rates increase after inflation,but are not affected by deflation.
D)Increasing interest rates precede inflation and decreasing interest rates precede deflation.

Question 23

What is not true of The Federal Reserve Act (1913)?

A)Membership in the system was made compulsory for national banks.
B)State banks were not permitted to join the system.
C)The member banks nominally owned the Federal Reserve Banks.
D)Member banks had to deposit cash,previously held as reserves,with the District Federal Reserve Bank.