Question 1

The National Banking Act of 1864 founded an adaptable, flexible system of central banking for the United States.

Accepted Answer

The National Banking Act of 1864 established a system of national banks and a uniform national currency, but it did not create a central banking system; the Federal Reserve, established in 1913, serves as the central banking system of the United States.

Question 2

The second Bank of the United States
A)was considered a great friend to state banks.
B)bowed to political pressure and made no attempt to regulate credit and the money supply.
C) was thought by Andrew Jackson to represent the advancement of the few at the expense of the many.
D) gained strength throughout the life of its first charter, eventually being granted a charter renewal in 1836.

Accepted Answer

Andrew Jackson was a vocal opponent of the second Bank of the United States, arguing that it represented the interests of a wealthy elite rather than those of the general population.

Question 3

During the mortgage and credit crises, the government did not intervene to rescue financial institutions on the brink of failure.

Accepted Answer

The government did intervene to rescue some financial institutions on the brink of failure, such as Bear Stearns and AIG. However, some smaller institutions were allowed to fail.

Question 4

What was the most common medium of exchange in colonial America?
A)paper money
B)coins
C) checks
D) pieces of gold and silver

Accepted Answer

Coins were the most common medium of exchange in colonial America, as paper money was not widely trusted or used, checks were not yet a common form of payment, and while gold and silver were valued, they were not as practical for everyday transactions.

Question 5

A loosening of lending oversight standards contributed to the recent mortgage crisis.

Accepted Answer

The loosening of lending oversight standards allowed for subprime mortgages to be issued to individuals who were not financially qualified, leading to a high rate of default and ultimately the mortgage crisis.

Question 6

Check 21 allows
A)anyone over the age of 21 to obtain a checking account.
B)a discount on account servicing fees if more than 21 checks are written during the month.
C) funds to remain in an account until 21 days after the check is written.
D) using substitute checks to process checks electronically.

Accepted Answer

Check 21 allows the use of substitute checks to process checks electronically, making it faster and more efficient than traditional processing methods.

Question 7

In the absence of a national banking system, state banks grew in number and influence in the early years of the United States.

Accepted Answer

Without a national banking system until the creation of the First Bank of the United States in 1791, state banks played a crucial role in finance and commerce in the early years of the United States.

Question 8

Counterfeiting was not a problem when the government first began printing paper currency.

Accepted Answer

Counterfeiting was already a problem when the government first began printing paper currency. Early notes had various security features, such as designs and watermarks, to try to prevent counterfeiting.

Question 9

Money is a medium of exchange for people to use to trade things of value.

Accepted Answer

Money serves as a universally accepted token that allows people to easily exchange goods and services, without having to rely on the barter system.

Question 10

What causes stagflation?
A)a stagnant economy
B)high inflation
C) high unemployment
D) all of the above

Accepted Answer

Stagflation is caused by a combination of stagnant economic growth, high inflation, and high unemployment. When economic growth is stagnant or slow, it leads to a reduction in job creation and a rise in unemployment. This lack of growth, coupled with high inflation (i.e., rising prices), leads to reduced purchasing power of wages and creates a vicious cycle of declining consumption and further economic slowdown. As businesses struggle to maintain profitability and cut costs, they may lay off workers or reduce wages, further exacerbating the unemployment problem. These factors, combined, produce a unique and challenging economic environment known as stagflation.

Question 11

There was no form of paper currency in colonial America.

Accepted Answer

There was a form of paper currency in colonial America known as "colonial scrip." However, it was not universally accepted and was often subject to inflation and depreciation.

Question 12

The largest denomination of paper currency printed in the United States today is the
A)one hundred dollar note.
B)five hundred dollar note.
C) one thousand dollar note.
D) ten thousand dollar note.

Accepted Answer

The largest denomination of paper currency printed in the United States today is the one hundred dollar note. This is because higher denominations, such as the five hundred dollar note, one thousand dollar note, and ten thousand dollar note, have been discontinued and are no longer printed or circulated in the United States.

Question 13

The largest denomination dollar note currently printed is the $100 note.

Accepted Answer

The largest denomination dollar note currently printed is the $100 note.

Question 14

A check is an example of bank currency.

Accepted Answer

A check is not bank currency; it is a document that instructs a bank to pay a specific amount of money from a person's account to another individual or entity.

Question 15

The Civil War in America brought monetary issues to a crisis point because
A)state banks began to lose influence.
B)rampant inflation threatened the entire economic system.
C) the counterfeiting of money became widespread.
D) all of the above.

Accepted Answer

The answer of The Civil War in America brought monetary...

Question 16

The National Currency Act of 1863 did all of the following EXCEPT
A)established the basic banking system in use today.
B)established standards for currency.
C) taxed state bank notes.
D) made the printing of state bank notes unprofitable.

Accepted Answer

The National Currency Act of 1863 did not establish the basic banking system in use today. The Federal Reserve Act of 1913 established the modern banking system. The National Currency Act of 1863 did establish standards for currency, taxed state bank notes, and made the printing of state bank notes unprofitable.

Question 17

To combat inflation, the government may institute any of the following policies EXCEPT
A)tighten the money supply.
B)lower taxes.
C) allow interest rates to rise.
D) a combination of a and C

Accepted Answer

Lowering taxes is not an effective policy to combat inflation because it would increase consumer spending and further fuel inflation. Tightening the money supply and allowing interest rates to rise are both effective policies because they reduce the amount of money in circulation, making it more expensive to borrow money and therefore slowing down spending and inflation. A combination of a and C may also be effective.

Question 18

The Emergency Banking Act of 1933
A)founded the system of central banking still used in the United States.
B)established a bank holiday that closed all banks in the country for one month.
C) expanded the monetary controls of the Federal Reserve.
D) separated commercial banking from investment banking to protect assets.

Accepted Answer

The answer of The Emergency Banking Act of 1933
A)founded the...

Question 19

The first Bank of the United States was a government institution.

Accepted Answer

The first Bank of the United States, established in 1791, was a private institution, although it was chartered by the federal government and had some government involvement.

Question 20

The National Banking Act of 1864 spelled the end of state banking systems in the United States.

Accepted Answer

The National Banking Act of 1864 did not end state banking systems; it established a national banking system and a uniform national currency but allowed state banks to continue operating.

Quiz 2: Development of the Us Banking System

The National Banking Act of 1864 founded an adaptable, flexible system of central banking for the United States.

The second Bank of the United States

During the mortgage and credit crises, the government did not intervene to rescue financial institutions on the brink of failure.

What was the most common medium of exchange in colonial America?

A loosening of lending oversight standards contributed to the recent mortgage crisis.

Check 21 allows

In the absence of a national banking system, state banks grew in number and influence in the early years of the United States.

Counterfeiting was not a problem when the government first began printing paper currency.

Money is a medium of exchange for people to use to trade things of value.

What causes stagflation?

There was no form of paper currency in colonial America.

The largest denomination of paper currency printed in the United States today is the

The largest denomination dollar note currently printed is the $100 note.

A check is an example of bank currency.

The Civil War in America brought monetary issues to a crisis point because

The National Currency Act of 1863 did all of the following EXCEPT

To combat inflation, the government may institute any of the following policies EXCEPT

The Emergency Banking Act of 1933

The first Bank of the United States was a government institution.

The National Banking Act of 1864 spelled the end of state banking systems in the United States.