Deck 25: The New Deal

Question 1

The U.S.Supreme Court ruled that the tax on food processors in the 1933 Agricultural Adjustment Act (AAA)was unconstitutional.

Answer 1

True

Question 2

The Social Security System of 1935 was flawed from the beginning.It left old-age pensions in the control of the states.Two examples include workers' and unemployment compensation.

Answer 2

True

Question 3

The commerce clause strengthened the federal government's interventionist power in industries operating on a national scale.

Answer 3

True

Question 4

Many researchers blame the severity and length of the Great Depression on the breadth and depth of government interference in private market affairs.

Question 5

The Glass-Steagall Act of 1933 separated commercial banks from most of their securities business.

Question 6

The National Recovery Administration (NRA)of 1933-35 attempted to restore market competition within U.S.domestic and international markets.

Question 7

The reforms,acts and programs that emerged during the New Deal were dissolved quickly at the end of the Great Depression.On this front,the New Deal command economy was similar to the World War I command economy.

Question 8

Capitalists like Henry Ford welcomed the Fair Labor Standards Act of 1938.It relieved them of the responsibilities associated with contracting wages,hours and working conditions.

Question 9

The Great Depression was marked by non-farm housing slumps and falling real estate prices,prompting many states to impose a moratorium on residential mortgage foreclosures.

Question 10

Implementation of the National Industrial Recovery Act (1933)positively impacted overall industrial production.

Question 11

For the first time in U.S.history,the federal government assumed responsibility for managing unemployment during the Great Depression.

Question 12

The decision to give the politically appointed members of the Federal Reserve Board an automatic majority weakened the power of the private sector in the determination of monetary policy.

Question 13

Social Security taxes were and are progressive,meaning that the highest proportion is taxed from the highest incomes.

Question 14

The research of Ben Bernanke (1983)found the banking system of the 1930s to be fundamentally flawed and unable to serve its function of financial intermediation.Federal help was needed.

Question 15

Barry Eichengreen (1992)blamed the severity of the worldwide depression from 1929 to 1933 on the countries who abandoned the rules of the gold standard during economic downturns.This abandonment relieved countries from the monetary discipline measures of the gold standard.

Question 16

Franklin D.Roosevelt's nationwide "Bank Holiday" in March 1933 merely finished the job started ?by the governors of the states,who were already closing down the banking systems.

Question 17

The National Industrial Recovery Act of 1933 increased competition among firms.

Question 18

The government significantly raised farm incomes by raising farm prices by: (i)destroying crops,?(ii)slaughtering millions of baby pigs and pregnant sows,(iii)paying farmers not to grow crops and (iv)injecting dye into harvested potatoes,making them inedible.

Question 19

The Great Depression tried and tested the Gold Standard and this standard met the challenge.

Question 20

The New Deal in U.S.history is that period during the Great Depression in which American "capitalism" is redefined and the role of the federal government in the economy fundamentally changes forever.

Question 21

Most researchers agree that the New Deal positively impacted

A) employment and overall production.
B) wages, working conditions and working hours.
C) electricity production and use of it as power.
D) all of the above.

Question 22

During the New Deal,the structure of capitalism in the U.S.changed forever in each of the following areas except for one.Which one?

A) The relation between government and markets changed in the sense that government interventions of one sort or another occurred.
B) The Federal Reserve System began to control actively the money supply and interest rates to control overall levels of consumer and business spending in the economy.
C) Government spending rose and was intended to serve as an economic stimulus, similar to private investment spending.
D) Individual households began to take greater charge over their own economic welfare with no government assistance.

Question 23

In 1938,another Agricultural Adjustment Act was passed.The error of the 1933 Act was now avoided.What had that error been?

A) Acreage allotments
B) Combining provisions for conservation with subsidies
C) Imposition of specific taxes on food processors
D) Excessive delegation of power

Question 24

Which of the following is blamed for the lack of increased business investment spending on new factories and machinery during the 1930s?

A) The new presence of government's large-scale economic activity caused business to lose some of its former confidence.
B) The general outlook stressed caution.
C) A much lower rate of population growth and family creation depressed the housing market.
D) All of the above.

Question 25

During the 1930s,labor legislation was

A) generally favorable to organized labor.
B) generally unfavorable to organized labor.
C) generally neutral with regard to organized labor.
D) virtually the same compared to previous periods.

Question 26

Which act established rules and regulations for minimum wage,overtime pay,record-keeping and child labor standards?

A) Fair Labor Standards Act of 1938
B) Walsh-Healy Act of 1936
C) National Industrial Recovery Act (1933)
D) Wagner Act of 1935

Question 27

Which of the following acts was/were designed to take out the risk in the securities industry?

A) Truth in Securities Act of 1933
B) Fair Labor Standards Act of 1938
C) Social Security Act of 1935
D) All of the above

Question 28

The objections to the Walsh-Healy Act of 1936,which mandated "prevailing wages" in government employment,

A) concerned the tendency of government wages to undercut those of the private sector.
B) came from the labor unions.
C) held that unemployment would be maintained artificially high.
D) held that payment of prevailing wages would reduce the national debt too slowly.

Question 29

Which of the following best describes the policy of the New Deal to combat the Great Depression?

A) Taxation should be increased so as to eliminate the deficit in the federal budget.
B) Government spending should be reduced so as to give businesses confidence that the free enterprise system was not being replaced by big government.
C) The government should offset deficiencies in private spending with increased government spending in order to create jobs-any jobs.
D) Private enterprise should be replaced by government planning because the market system had failed to provide prosperity and economic growth.

Question 30

President Franklin D.Roosevelt's first action regarding the run on banks was to

A) close all banks.
B) increase the money supply.
C) prohibit bank foreclosures.
D) provide federal guarantees to depositors.

Question 31

Which of the following federal activities was new under the New Deal? The federal government

A) subsidized building construction.
B) provided federal finances to build houses.
C) established regulatory agencies intended to influence activities in private markets.
D) engaged in all of the above.

Question 32

The New Deal allowed the federal government to reorganize and pursue economic planning.

Question 33

When the government increased spending during the 1930s in an attempt to create jobs and end the Great Depression,it provided an example of expansionary

A) fiscal policy.
B) monetary policy.
C) regulatory policy.
D) welfare policy.

Question 34

The National Industrial Recovery Act (1933)

A) did not permit businesses to set prices and production quotas.
B) established three advisory boards composed of government, Webb-Pomerene firms ?and members of the Federal Reserve System.
C) was thrown out by the Supreme Court in May 1935.
D) prohibited collective bargaining.

Question 35

Those closest to fomenting a real revolution during the early years of the Great Depression were

A) bankers.
B) farmers.
C) industrial workers.
D) the middle class.

Question 36

Capitalists like Henry Ford welcomed the Fair Labor Standards Act of 1938.It relieved them of the responsibilities associated with contracting wages,hours and working conditions.

Question 37

The "New Deal" programs of the 1930s aimed at

A) transforming American capitalism into a planned socialist economy.
B) introducing short-term measures to cure the depression but no fundamental changes in the American economy.
C) introducing measures to deal with the crises and cure the depression combined with measures to restructure important aspects of the economy and increase the role of government in it.
D) reintroducing laissez-faire policies (non-government intervention) like those that had worked in the 19th century.

Question 38

The Bank Act of 1935 restructured the Federal Reserve System (FRS)in which of the following ways?

A) The FRS Board of Governors gained discretionary control over bank reserves and margin requirements for loans against securities.
B) The Governor's Committee was renamed the Federal Open Market which was comprised of ?12 members, 7 of whom were governors on the FRS Board.
C) The secretary of the U.S. Treasury and comptroller of currency were removed from the ?FRS Board.
D) All of the above

Question 39

The National Labor Relations Act of 1935 and the Fair Labor Standards Act of 1938 forced employers to

A) negotiate with unionized labor.
B) keep hours at a minimum.
C) pay maximum wages.
D) do all of the above.

Question 40

The "New Deal" measures introduced in 1933 and 1934 to end the depression

A) brought about almost complete recovery by the mid-1930s.
B) were not completely successful in ending the Depression, which lasted until the beginning of World War II.
C) actually interfered with recovery, and the Depression worsened in the mid-1930s.
D) were not very successful at first but finally ended the Depression by the late 1930s.

Question 41

Compare and contrast the Great Depression policy moves in the housing sector to those made during the most recent crisis.Highlight their differences and try to explain them.

Question 42

The constitutionality of the Agricultural Adjustment Act (AAA)and National Recovery Act (NRA)were questioned.On what grounds were these Acts questioned,and what were the outcomes?

Question 43

The New Deal reduced

A) government involvement in private affairs.
B) individual liberty.
C) taxes.
D) rent-seeking.

Question 44

"The U.S.experience during the Great Depression offers little support for those individuals who argue for a public policy of laissez-faire." Discuss.

Question 45

How do consumers vote for which producers stay in business and which go? Were these voting rights altered under the New Deal? Explain.

Question 46

Discuss the key transformations in labor history during the New Deal era.

Question 47

Compare and contrast the First and Second New Deals.

Question 48

Explain why some economists claim that the federal government and the New Deal programs of the Great Depression were responsible for the severity and length of the economic downturns.

Question 49

Explain how the National Banking Act of 1935 transformed how banking was conducted in the nineteenth century.

Question 50

Which of the following was illustrated by the majority voting decisions witnessed during the Great Depression?

A) If the U.S. wants to get the most from its resources, the pricing of goods and allocation of investment should be decided by majority voting.
B) In a representative democracy, majority voting will assure that approved projects are productive.
C) There are good reasons to expect that majority voting will sometimes result in the approval of projects that are inefficient.
D) Private firms can force their customers to pay for products they produce, but the government cannot do so.

Question 51

Discuss the role of the federal government as an employer.Discuss the advantages and disadvantages associated with the government assuming this role.

Question 52

The Social Security Act (SSA)of 1935 provided a security net for individuals who found themselves without productive resources for a variety of reasons.Describe those individuals targeted by the SSA and explain under what conditions they were eligible in 1935.Did the initial creators of the SSA intend for it to be used as it is today? Explain.

Question 53

Was there anything "new" about the New Deal? Where did it come from? What did it try to accomplish? To what extent did the New Deal alter basic U.S.institutions?

Question 54

A government fulfills a protective function when it

A) gives cash payments to the poor.
B) provides funds for flood control projects and builds highways.
C) prevents illegal seizure of private property.
D) redistributes income.

Question 55

"The myth persists that from the beginning Roosevelt followed a set of fiscal policies directed specifically at,and adapted to,the objective of increasing aggregate demands for output to the ?levels required to restore acceptable levels of real output and employment.This is indeed a myth.Roosevelt had formulated no definite fiscal policy before he became President.As already noted,he excoriated Hoover repeatedly during the 1932 campaign for his budget deficits and the alleged threat to the government's credit,and he promised to put the government's financial house in order." ?(L.V.Chandler,America's Greatest Depression,1929-1941,p.136).Evaluate and compare the chief characteristics of the policies taken by the Hoover and Roosevelt ad?ministrations in their attempts to cope with the Great Depres?sion.

Question 56

The use of federal power to set up a national health insurance was debated in Congress as early as 1938.Discuss why congressional efforts to pass an act establishing a national health insurance plan failed to pass then.Describe what has changed regarding this debate since then.

Question 57

Suggest a set of policies,macro- and micro-economic,which the federal government might have followed to avoid the Great Depression.How close did the Hoover administration come to adopting your recommendations?

Question 58

Under the New Deal,the institutional structure of the U.S.economy changed fundamentally.Explain how.However,the fundamental political principles held by the colonists survived.What were these principles and how did they survive?