Question 1

What most accurately describes what happened to earnings in the US between 1914 and 1920?
A)Both nominal and real earnings increased substantially.
B)Nominal and real earnings dropped significantly as the World War I triggered a recession.
C)Nominal earnings increased slightly,but real wages decreased because of the large inflation.
D)A period of deflation led real earnings to increase even though nominal earnings had decreased slightly.

Accepted Answer

Both nominal and real earnings increased substantially during this time period, reflecting the economic growth and expansion that occurred during and after World War I. In particular, the rapid industrialization and urbanization of the economy led to significant increases in productivity and wages, driving up both nominal and real earnings.

Question 2

At the end of World War I,the ___________ outlined in broad terms the territorial adjustments that should occur in Europe,the extent of the reparations the losing nations owed,and the general association of nations that would guarantee each nation's sovereignty in the future.
A)Treaty of Versailles.
B)The Fourteen Points.
C)The Economic Consequences of Peace.
D)The United Nations.

Accepted Answer

The Fourteen Points, proposed by U.S. President Woodrow Wilson, outlined principles for peace and the reorganization of post-war Europe, including territorial adjustments, reparations, and the formation of a general association of nations, which later influenced the creation of the League of Nations.

Question 3

Between 1914 and 1920,the US price level ______________.
A)fell dramatically.
B)nearly doubled.
C)rose and fell in accordance with intensity of the war.
D)remained relatively stable.

Accepted Answer

During World War I, the US experienced inflation due to increased demand for goods and decreased supply as resources were diverted to the war effort. This led to a significant increase in the price level, with consumer prices nearly doubling between 1914 and 1920.

Question 4

The U.S.financed WWI primarily by:
A)increasing personal income taxes.
B)increasing corporate taxes and luxury taxes.
C)borrowing from the public.
D)printing new money.

Accepted Answer

The US primarily financed WWI by borrowing from the public through the sale of bonds. The government introduced Liberty Bonds to the public as a way to raise money for the war effort. These bonds were advertised as patriotic investments and were purchased by citizens, corporations, and banks.

Question 5

What best describes the role of the United States in World War I?
A)The U.S.entered World War I as soon as it started.
B)The U.S.was a neutral moderator throughout the war.
C)The U.S.entered the war on the side of Russia and opposed Austria Hungary.
D)U.S.business suffered severe financial losses during the war.

Accepted Answer

The United States entered World War I in 1917, siding with the Allies (including Russia at the time) against the Central Powers, which included Austria-Hungary.

Question 6

One of the causes of World War I was _________.
A)the deteriorating standards of living in Europe.
B)the assassination in Serbia of Austrian Archduke Ferdinand.
C)Europe had experienced several wars in recent decades that spilled over into World War I.
D)the European working class was increasingly fractured and nationalistic.

Accepted Answer

The assassination of Archduke Franz Ferdinand of Austria in Sarajevo, Bosnia, by a Serbian nationalist on June 28, 1914, directly precipitated the outbreak of World War I by causing Austria-Hungary to declare war on Serbia, setting off a chain of alliances and declarations of war.

Question 7

The best description of the economic ideology during World War I was __________.
A)The belief that the economy could be strengthened by centralized coordination.
B)The economy would work best with a strong commitment to the free market.
C)The US should eliminate many federal agencies during World War I to make the government more efficient.

Accepted Answer

During World War I, the government believed that the economy could be strengthened by centralized coordination. This led to the creation of agencies like the War Industries Board, which oversaw production and distribution of war materials. The free market was not seen as the solution to economic issues during this time. Eliminating federal agencies was not a common belief during World War I.

Question 8

All of the following are associated with the War Industries Board except
A)the negotiation of the prices of key industrial products.
B)developing and implementing the bulkline pricing system to determine industrial prices that maximized output.
C)the unintended consequence of the "priorities inflation" of contracts.
D)establishing and enforcing minimum wages for manufacturing workers.

Accepted Answer

The War Industries Board did not establish and enforce minimum wages for manufacturing workers.

Question 9

Which of the following was not a reason why wages in the US increased during World War I?
A)A sharp decrease in immigration during the war.
B)A large increase in drafting men into the armed forces.
C)A large increase in the number of government contracts.
D)A large increase in the number of women who were employed in the labor market.

Accepted Answer

The reason why wages increased during World War I included A) a sharp decrease in immigration during the war, B) a large increase in drafting men into the armed forces, and C) a large increase in the number of government contracts. However, the increase in the number of women employed in the labor market was a contributing factor to the increase in wages. Therefore, option D is not a reason why wages increased during World War I.

Question 10

The War Industries Board,headed by Bernard Baruch,performed all of the following functions except
A)negotiating prices of key industrial products.
B)developing and implementing the bulkline pricing system to determine industrial prices that maximized output.
C)establishing a ratings system for government contracts.
D)establishing and enforcing minimum wages for manufacturing workers.

Accepted Answer

The War Industries Board did many things to help with the war effort, including negotiating prices of industrial products, establishing a ratings system for government contracts, and developing and implementing the bulkline pricing system. However, they did not establish and enforce minimum wages for manufacturing workers. This responsibility fell to the Department of Labor.

Question 11

What best describes the impact of a price ceiling in a competitive market?
A)This benefits all consumers because they are able to obtain the good for a lower price.
B)The quantity supplied will be in excess of the quantity demanded.
C)It will likely lead to consumers waiting in line for longer periods of time to buy the good.
D)It will benefit both consumers and producers of the good.

Accepted Answer

A price ceiling sets a maximum price for a good or service, meaning that it cannot be sold at a higher price. In a competitive market, this will result in excess demand as consumers will be willing to buy more of the good at the low price. This excess demand will lead to shortages, which can result in longer waiting times and even black markets. Therefore, option C is the best choice as it accurately describes the impact of a price ceiling in a competitive market. Option A is incorrect because a price ceiling can often lead to shortages, making it difficult for all consumers to obtain the good. Option B is also incorrect because if the quantity supplied exceeds the quantity demanded then there would be no shortage or need for a price ceiling. Option D is also incorrect because a price ceiling may benefit consumers in the short term, but it could harm producers and lead to reduced supply and quality in the long term.

Question 12

To pay for WW I,the national debt was expanded from ___ percent of GDP at the beginning of the war to ___ percent of GDP by the end of the war.
A)1;5
B)2;13
C)3;32
D)The national debt did not expand due to reparations payments.

Accepted Answer

The answer of To pay for WW I,the national debt...

Question 13

Food rationing during World War I under the wartime food administration featured
A)voluntary calls for "Meatless Mondays" and "Wheatless Wednesdays."
B)a broad policy of direct controls on prices set by the Food Administrator.
C)rationing for all food products except sugar.
D)a pervasive belief that fear of government retribution,rather than appeals to moral principles,was key to reducing consumption,and maintaining food surpluses for export.

Accepted Answer

The passage specifically mentions "voluntary calls for 'Meatless Mondays' and 'Wheatless Wednesdays'" under the wartime food administration's rationing during World War I. Option B is incorrect as the passage doesn't mention direct controls on prices set by the Food Administrator. Option C is also incorrect as the passage doesn't state that sugar was excluded from rationing. Option D is not supported by the passage's description of wartime food rationing.

Question 14

If a government wants to distribute the burden of increased spending onto future generations it should:
A)Increase taxes.
B)Borrow from the public.
C)Print more money.

Accepted Answer

Borrowing from the public allows the government to spread the burden of increased spending over time by repaying the debt with future tax revenues. Increasing taxes or printing more money may cause immediate economic consequences, such as inflation or reduced consumer spending, and may not necessarily ensure the burden of increased spending falls solely on future generations.

Question 15

Robert Higgs argued that ________ best explained the growth of "Leviathan" (Big Government).
A)crises that changed fundamental ideologies.
B)urbanization.
C)the decline in organized religion as a provider of aid and relief for the poor.
D)expansion of the right to vote.

Accepted Answer

Robert Higgs argued that crises, such as wars, economic depressions, and natural disasters, created opportunities for government to expand and assume more power, which would then be difficult to roll back even after the crisis ended. This explanation is known as the "ratchet effect."

Question 16

During the post war period,
A)an economic slowdown occurred immediately following the Armistice.
B)a vigorous boom began in 1919.
C)the Federal Reserve followed a policy of keeping its discount rate below market rates.
D)All of the above are correct.
E) Only b and c are correct.

Accepted Answer

The answer of During the post war period,
A)an economic slowdown...

Quiz 21: Mobilizing for War

What most accurately describes what happened to earnings in the US between 1914 and 1920?

At the end of World War I,the ___________ outlined in broad terms the territorial adjustments that should occur in Europe,the extent of the reparations the losing nations owed,and the general association of nations that would guarantee each nation's sovereignty in the future.

Between 1914 and 1920,the US price level ______________.

The U.S.financed WWI primarily by:

What best describes the role of the United States in World War I?

One of the causes of World War I was _________.

The best description of the economic ideology during World War I was __________.

All of the following are associated with the War Industries Board except

Which of the following was not a reason why wages in the US increased during World War I?

The War Industries Board,headed by Bernard Baruch,performed all of the following functions except

What best describes the impact of a price ceiling in a competitive market?

To pay for WW I,the national debt was expanded from _ percent of GDP at the beginning of the war to _ percent of GDP by the end of the war.

Food rationing during World War I under the wartime food administration featured

If a government wants to distribute the burden of increased spending onto future generations it should:

Robert Higgs argued that ________ best explained the growth of "Leviathan" (Big Government) .

During the post war period,