Deck 3: America on the Eve of Revolution

Question 1

Paper money helped colonists pay soldiers for services provided when specie was not available.?This money was fiat money; it did not possess specie backing.

Answer 1

True

Question 2

During the colonial period,the English permitted both silver and gold to move freely in and out of the colonies.

Answer 2

False

Question 3

The value of output produced in colonial America equals the value of income generated by the productive resources (land,natural resources,labor,capital and entrepreneurial talent)used to produce that output.

Answer 3

True

Question 4

By 1774,the Southern colonies'

A) share of total colonial wealth was the lowest.
B) wealth per capita was the highest.
C) land contributed very little to total wealth.
D) depended heavily on immigrant labor.

Question 5

According to the quantity theory of money,a shortage of money should result in deflation ?(falling prices)or negative growth (decreasing quantities of output).

Question 6

Growth in real output per person occurred,on average,in colonial America.This growth translated into a great improvement in the quality of life for all citizens.

Question 7

By restricting the amount of precious metals going into the colonies,the British significantly hindered economic growth in colonial America.

Question 8

Of the 1790 colonist population,over 80 percent was of European origin while about 20 percent was of African origin.

Question 9

Animal skins,livestock,tobacco,teeth and rocks have historically served as a medium of exchange,unit of account,store of value and method of deferred payment.

Question 10

During the colonial period,

A) both men and women married on average during their teenage years.
B) women married on average during their teenage years and men during their early 20s.
C) both men and women married on average at ages between 20 and 25.
D) both men and women married on average during their late 20s.

Question 11

The money value of all trading activity (Q)at market prices (P)is called Gross Domestic Product for a given year.

Question 12

By the end of the colonial period in U.S.history,slaves in the colonies

A) owned land communally.
B) had status in courts.
C) helped meet a labor need.
D) were born in Europe and shipped to the colonies.

Question 13

Which of the following was the single largest component of wealth in colonial America?

A) Land
B) Stocks
C) Bonds
D) Capital

Question 14

By the end of the colonial period,the Middle Colonies' population gained over New England but the Southern population continued to dominate.

Question 15

Colonialists tried to attract precious metals and coins by raising or attempting to raise the colonial price of the foreign money.This is called devaluation.

Question 16

Americans fell behind Europeans on the technology front.

Question 17

Modern research suggests that colonial Americans experienced positive rates of economic growth but not a high quality of life.

Question 18

Couples marrying at younger ages in colonial America than in Europe contributed to the relatively higher birth rates.

Question 19

The value of the output produced in an economy reflects the value of the income generated by the factors of production used to produce that output.

Question 20

The majority of Americans at the end of the colonial period were of

A) French origin.
B) British origin.
C) German origin.
D) Dutch origin.

Question 21

What impact did colonial inflation have on the colonial economy?

A) An overall increase in private consumption spending in colonial America
B) A decrease in interest rates in colonial America
C) A decrease in colonial exports and a rise in colonial imports
D) An increase in the exchange rates between colonial money and specie

Question 22

According to the theory of money,what is the most compelling evidence to use against those researchers or historians who believe that England was responsible for creating a shortage of money in colonial America?

A) Colonial growth in commerce and trade proceeded.
B) The colonists paid moderate rates of interest.
C) Investment in colonial America occurred.
D) Prices increased, rather than decreasing.

Question 23

There is statistical evidence to suggest that under English rule,colonists experienced

A) financial chaos.
B) economic harm in terms of commerce, trade and investment.
C) growth and prosperity.
D) all of the above.

Question 24

Define Gross Domestic Product (GDP).Identify what it does and does not include.Explain the relationship between increases in GDP and improvements in the overall standard of living.

Question 25

The distribution of income and wealth in colonial America was

A) relatively equal to that of modern America.
B) relatively unequal to that of modern America.
C) unequal in roughly the same degree as that in modern America.
D) unequal, but the data are not good enough to allow a comparison with modern America.

Question 26

In colonial days,the British liked to think of their relationship to the American settlements as that of a mother country sending manufactured goods to its colonies in exchange for raw materials.Explain how this relationship benefited both parties.How was it linked to regional economic specialization,trade and wealth accumulation in Great Britain and the colonies?

Question 27

Explain how each colonial region made up for any trade deficit in its balance of payments with other countries.

Question 28

With regard to incomes at the time of the Revolution,

A) colonial incomes before taxation were high, but because of heavy taxation, after-tax incomes were lower than those of the British.
B) there is no data available that provide any information on the subject.
C) both before-tax and after-tax colonial incomes were lower than those in England.
D) incomes in the colonies were higher than in England, especially after-tax incomes, because of relatively light taxation of the colonists.

Question 29

To what can we attribute the relatively high population growth in colonial America,compared with growth in England?

A) The relatively advanced medicine in the colonies
B) Better climate, food and water
C) Better hygiene and preventive care
D) All of the above

Question 30

Economic historians do not believe there was a shortage of money in colonial America for which of the following reasons?

A) Interest rates were not unreasonably high.
B) Long-term prices were rising.
C) The colonial economy was growing in real terms.
D) All of the above.

Question 31

Population grew prodigiously during the colonial period.What was/were the most important factor(s)fueling this increase?

A) Immigration
B) Relatively low mortality and high birth rates
C) Relatively high mortality combined with high birth rates
D) Immigration and high birth rates

Question 32

According to Hughes and Cain (2011),American economic history is the story of economic growth.Economic growth

A) necessarily means an improvement in the quality of life for all individuals.
B) does not necessarily measure an improvement in the quality of life; it merely indicates the potential for improvement.
C) as conventionally measured considers an employed person living in the pollution and congestion of modern Tokyo to be "worse off" than a sun-tanned artist watching another glorious sunset on the beach in Tahiti.
D) is measured by the increases in total output of goods and services less any environmental destruction that occurs in the process of production.

Question 33

Define white servitude and compare it to slavery.Explain how both supported economic growth in early America.

Question 34

The perceived specie shortage led colonists to invent:

A) Country money
B) Paper money
C) Inflationary dollars
D) Conservative money

Question 35

When the English pound appreciated against a colonial currency,this signaled

A) that colonists needed more colonial currency to buy an English pound.
B) that colonists needed less colonial currency to buy an English pound.
C) that colonists needed more colonial and Spanish currency to buy an English pound.
D) nothing of economic importance.

Question 36

Factors of production include

A) a person's physical work or labor, which can be used to provide agricultural, maritime or manufacturing services.
B) capital, such as a piece of farm equipment, a building or an industrial machine, which can be used to produce a final good or service.
C) land, minerals and other natural resources, which are extracted to manufacture capital or used to produce food and surplus crops for trade.
D) all of the above.

Question 37

Identify the sources of natural population growth and explain how they supported colonial economic growth.

Question 38

The shortage of precious metals or coins provided colonists with incentives to find alternatives.These alternatives included everything listed below except

A) Teeth
B) Country money
C) Fiat money
D) Bills of credit

Question 39

What is the total money value of all goods and services evaluated at market prices called?

A) Gross Domestic Product (GDP)
B) Labor productivity
C) Wealth
D) Capita

Question 40

Regarding the regional distribution of population,

A) New England as a whole continued to increase in its population base faster than the Middle Colonies throughout the colonial period.
B) Virginia had the smallest population of any colony at the time of the Revolution.
C) at the end of the colonial period, nearly half the total colonial population resided in the five Southern colonies.
D) the distribution remained firmly concentrated in what is now called the thirteen original colonies.

Question 41

Throughout world history,precious metals have served as money.Describe the four functions of money and identify other items that can serve as money.In colonial America,what did colonists ?use as money other than English silver and gold coins? How did this form of money impact the colonial supply of money given the mercantilist policies of England?

Question 42

Using the economic way of thinking,explain why colonists believed a shortage of money could negatively impact their economy.Use the quantity theory of money (MV ? PQ)to explain why?a shortage of colonial money could either lead to negative economic growth (decrease in Q)or deflation (a decrease in P).Assume velocity (V)is stable or constant.According to the research of economic historians,did colonial America experience positive or negative growth? Did colonists experience inflation or deflation in the years leading up to the American Revolution? Does this evidence support the claim that there was a shortage of money in colonial America?

Question 43

How does stable money affect investment,commerce and economic growth? How does it encourage operation on the comparative advantage and what does operation on the comparative advantage mean to trade?

Question 44

Discuss how the shortage of gold and silver coin in the colonies encouraged innovation in money.How does the innovation impact us today?

Question 45

What is inflation? Was it a problem during colonial times? When does inflation negatively impact income and wealth? When does it ease problems of debtors against creditors? When does it encourage imports into a country and discourage exports out of the same country?