Question

1. The reason we no longer have a gold standard is because:

a. banks refused to accept gold for deposit.

b. banks refused to issue gold for paper money.

c. people grew tired of using gold.

d. the government made it illegal to use gold as money.

e. Both A and B of the above are true.

2. According to Christoff-Kurapouna, what effectively eliminated the gold standard?

a. President Roosevelt’s executive order of 1933 making the holding of gold illegal.

b. World War II.

c. World War I.

d. The Bretton Woods agreement.

e. The founding of the United Nations.

3. Murphy argues that:

a. economies can prosper during periods of deflation.

b. a gold standard would have a deflationary bias.

c. we would be better off with the classical gold standard.

d. All of the above.

e. None of the above.

4. Following the initiation of the bank holiday in 1933:

a. nearly two in five national banks failed to reopen.

b. most big city banks were closed for about sixty days.

c. bank depositors continued to withdraw their funds until late in 1935.

d. the crisis for the banking sector, for all intents, was over.

e. about 99% of all state chartered banks were able to reopen.

5. Which of the following is/are true about the Agricultural Adjustment Administration?

a. It established minimum prices on many agricultural crops.

b. It killed off millions of pigs and cattle in order to keep prices high.

c. It generally transferred wealth from non- farmers to farmers.

d. It was struck down as unconstitutional by the Supreme Court.

e. All of the above.

6. Which of the following is false?

a. During the depression of 1920-1921, the Federal Reserve district banks set their own interest rate policies, but they mostly followed the lead of the New York bank.

b. One reason why there was little government intervention in the economy during the depression of 1920-1921 was because President Wilson had suffered a stroke.

c. The Great Depression began with the stock market crash of 1929.

d. Before Hoover was president he had been the Secretary of Commerce under Presidents Harding and Coolidge.

e. As Smiley notes, “Despite fears, increased reliance on government and decreased reliance on markets proved effective.”

Answer 1

1: (e) Both (a) and (b)

We no longer have a gold standard because banks refused to accept gold for deposit and refused to issue gold for paper money. This is because gold standard was replaced by fiat money and now it became a legal tender so there is no point of gold standard.

2: (a) President Roosevelt's executive order of 1933 making the holding of gold illegal.

This is because americans were withdrawing their gold and currency from the beleaguered banking system and in order to prevent runs on banks and the resulting drain of the gold from the system, Roosevelt made gold ownership illegal.

3: (b) a gold standard would have a deflationary base.

Murphy argued that when there is limited supply of gold standard, it stifles economic growth and causes inflation.

4: (d) the crisis for the banking sector, for all intents , was over.

This was because the confidence in the nation's banking system was rebuilt.