Final Exam
American Economic History
Fall 1999
Professor Rockoff

Version A

Name ________________________________________.

SS# _________________________________________.

Instructions. Answer the following questions by marking the appropriate block on your scantron or filling in the appropriate section on your answer sheet. Turn in both the scantron and the question sheet. There are 80 multiple choice questions and 10 short answers.

Multiple Choice (1 point each) There is one best answer to each question in the sense of the one which appears to be most generally true in the light of class discussions and assigned readings. Use the scantron. There are no trick questions. I am trying to find out whether you remember the important points about American economic history that we have gone over this semester. In a few cases I have put individual words in bold. These are hints that you need to slow down and think carefully about your answer.

1. According to Milton Friedman, the crucial moment in which an ordinary recession turned into The Great Depression was when _____ occurred.

a. the stock market crash
b. the first banking crisis
c. the failure of the Bank of the United States
d. the third banking crisis

2. Richard Overy argued that U.S. strategic bombing in World War II had ____ because ____.

a. failed, it failed to stop the increase in German munitions production
b. succeeded, it stopped the increase in German munitions production
c. failed, produced unacceptably high civilian casualties
d. succeeded, it diverted the German airforce from the Eastern front 3. John Kenneth Galbraith argued that U.S. strategic bombing in World War II had ____ because ____.
a. failed, it failed to stop the increase in German munitions production

b. succeeded, it stopped the increase in German munitions production

c. failed, produced unacceptably high civilian casualties

d. succeeded, it diverted the German airforce from the Eastern front

4. There are various theories about why stock prices crashed when they did in 1929. The one I argued for in class was that a. the Fed and other central banks were raising their discount rates

b. the Fed had raised margin requirements on stock market loans

c. federal income taxes were raised

d. there were bad earnings reports from a number of firms including RCA
 

 5. The Smoot-Hawley tariff was ____ that in the humble opinion of Professor Rockoff probably ___.  
a. an upward revision of the taxes on imported goods; caused the stock market crash, but not the Great Depression

b. a downward revision on the taxes on imported goods; caused the stock market crash, but not the Great Depression

c. an upward revision of the taxes on imported goods; had little to do with the stock market crash or the Great Depression

d. a downward revision on the taxes on imported goods; had little to do with the stock market crash or the Great Depression

 6. During the stock market boom of the late 1920s, say 1928 and 1929, stock prices ____. a. rose at about the same rate as dividends

b. rose faster than dividends

c. rose more slowly than dividends

d. there is, surprisingly, not enough information to know what happened to prices relative to dividends
 

 7. The practice of paying for stock with (say) 50 percent cash and 50 percent in funds borrowed from a broker that became common in the 1920s, is known as ____.

        a. Intermediated borrowing

        b. buying on margin

        c. fractional reserve buying

        d.buying at par

8. In the 1920s places where you could make a small wager on the price of a share of stock were called ____.
 

a. moonlight trading companies

b. bucket shops

c. investment affiliates

d. off-Wall-Street brokerages


9. According to economic historian Christina Romer, the major initial impact of the stock market crash of 1929 was on
 

a. agriculture

b. investment spending

c. state and local government purchases

d. consumer durable purchases
 

10. During the summer of 1929, most central banks ___ interest rates in order to _____.
 
a. raised, deflate the stock market

b. lowered, stimulate the economy

c. raised, stimulate the economy

d. lowered, deflate the stock market
 

11. The First Banking Crisis in the 1930's involved mainly

a. rural banks in the U.S.

b. large European banks

c. New York banks on Wall Street

d. Banks all over the country; it hit randomly

12. The failure of the Bank of the United States in December 1930 probably intensified the banking panic for each of the following reasons except that it proved that ___

a. the Fed might fail to act as a lender of last resort

b. big banks could fail

c. New York Banks could fail
d. that Wall Street Banks could fail


13. Britain's departure from the gold standard in 1931 led to ________ in the United States because ________.

a. an improvement in economic conditions in, British imports from the US increased

b. an improvement in economic conditions in, world interest rates fell

c. a deterioration in economic conditions, British investment in the US declined

d. a deterioration in economic conditions in, exports of gold from the US increased
 

 14. A number of economic historians have argued that "asymmetric information" problems in the banking industry were exacerbated by the depression. In this context, asymmetric information refers to the idea that ____. a. only the Federal Reserve has a complete set of information about how the economy is functioning

b. only borrowers know whether they really intend to repay their loans

c. business firms find it easier to get loans than private individuals

d. industrial firms find it easier to get loans than farmers
 

 15. The aspect of the "Second Banking Crisis" of the 1930s that distinguished it from the First Banking crisis" was that during the second crisis ___. a. the Federal Reserve finally decided to act as lender of last resort

b. the stock market boom finally came to an end with the crash

           c. banks in all regions of the country failed d. President Roosevelt asked Congress to establish Federal deposit insurance 16. During the famous "Bank Holiday" in 1933 ___. a. Bank workers went on illegal strikes to protest the intensity of work caused by the crisis

b. Industrial unions went on strike to protest the deteriorating banking situation

c. Business closed so that people could get their money out of the banks

d. President Roosevelt closed the banks

 17. During the federal Bank Holiday banks were inspected. In Class I argued that the inspection program ____

          a. served no useful purpose

b. sometimes rewarded bad banks because no market vaue could be placed on their assets

C. slowed the reopening of the banks, and therefore the economy from recovering

d. led to a shift of power from the Comptroller of the Currency to the Federal Reserve
 

 18. According to the text (Chapter 9) the Canal Era began with the great success of the _____.
 
a. Erie canal in New York

b. Miami canal in Ohio

c. Mainline canal in Pennsylvania

d. Chesapeake canal in Maryland
 

19. According to the lecture the Interstate Commerce Commission was captured by
 
a. do-gooders

b. the railroads

c. major shippers

d. the federal government
 

20. According to the text (chapter 22) the 1920s were a period of ___ in American agriculture caused primarily by ___. a. prosperity, new production techniques developed during WWI

b. hard times, new production techniques developed during WWI

c. prosperity, the destruction of farm lands in central and eastern Europe

d. hard times, excessive debt built up in WWI
 

  21. Which of the following is true about German rearmament in the 1930s ______. a. the Germans spent about the same on arms as other great powers such as Great Britain

b. the Germans spent more on arms than Britain but less than the Soviet Union

c. the Germans built up a large arsenal by spending more on arms than the other great powers

d. surprisingly, the Germans spent less on arms than the other great powers

 22. In class I noted that there were two theories of strategic bombing in World War II. One stressed the destruction of ____, the other stressed the destruction of ____. a. sensitive points in the enemy economy, massive amounts of labor and capital

b. military targets, information nodes such as radio stations

c. information nodes such as radio stations, water supplies

d. housing, military targets

 23. During World War II price controls went through a series of phases. Of the following, the main problem during the period of "selective controls" was ____.
 
a. rapid inflation in the uncontrolled sector

b. forced uptrading

c. dishonest reporting of base period prices

d. stubborn resistance to government calls for self control

24. During World War II price controls went through a series of phases. Of the following, the main problem during the period of the "general maximum price regulation" was ____.

          a. rapid inflation in the uncontrolled sector

          b. forced uptrading

c. dishonest reporting of base period prices

d. stubborn resistance to government calls for self control

 25. During World War II price controls went through a series of phases. Of the following, the main problem during the period of the "hold the line order" was ____.

        a. rapid inflation in the uncontrolled sector

        b. forced uptrading

        c. dishonest reporting of base period prices

        d. stubborn resistance to government calls for self control

26. In class I argued that the Union Pacific Railroad and Central Pacific railroad engaged in races to see who could build the most track in a day because ____.

a. legislation limiting access to Chinese labor was in the offing

b. claims of racial superiority by one ethnic group would be challenged by another

c. the constant threat of Indian attacks meant that construction crews wanted to get out in a hurry

d. legislation had created financial incentives to finish quickly

           e. boys will be boys

27. In class I argued that one of the major trade-offs with the gold standard was that the gold standard produced ____ while modern standards (such as the Bretton Woods system) produced ____.

        a. more inflation, more unemployment

        b. less inflation, more unemployment

        c. more inflation, less unemployment

        d. less inflation, less unemployment

28. The failure of the famous ____ bank in Austria marked the beginning of the Great Depression in Europe.

a. Kreditanstalt

b. Rothchild

c. Von Mises

d. Schlesinger

29. According to Milton Friedman and Anna J. Schwartz the most important cause of the Great Depression was the ___.

a. stock market crash

b. decline in the stock of money

c. decline in investment spending

d. decline in consumption of consumer durables

30. According to class lectures, prices ____ from 1896 to World war I because _____.

a. rose, more and more countries joined the gold standard

b. fell, more and more countries joined the gold standard

c. rose, gold began to come in from South Africa

d. fell, rapid technological process

31. According to the class lecture, the system of allowing draftees to hire substitutes (used during the Revolution and the Civil War) _____ than a system in which the draftee must serve.

          a. was more costly to the Treasury

b. was more regressive because it transferred income from the poor to the rich

c. was economically more efficient because it allowed the most productive men to remain home

d. economically less efficient since the army did not get the best soldiers

 32. When Britain left the gold standard in 1931 her economists believed that the pound price of foreign currencies -- number of British pounds equal to one dollar (or one franc or one peso) -- would ____ and this would lead to more ____.

a. rise, exports from Britain

b. fall, imports into Britain

c. rise, increased government spending in Britain

d. fall, decreased interest rates in Britain

33. Economic historians frequently argue that the reason the Stock Market Crash of 1929 had such a big impact was that ___.

a. the crash came after people had already realized that the economic expansion could not continue forever

b. the crash ended belief that a "new age" of continuous prosperity had arrived

c. the stocks that had risen the most in value were the old line industrial stocks that were bound to lose value

d. the Federal Reserve had long been proclaiming that higher stock prices were important to preserving prosperity

 34. One of the most famous New Deal agencies was the Civilian Conservation Corps which is described in chapter 24. The purpose of this agency was to provide ___. a. a source of funding for state flood control projects.

b. jobs for young men cleaning parks, planting trees, and so on

c. federal scholarships for university students studying forest management, flood control, and similar subjects

d. federal funding for universities that undertook research on the environment

 35. According to Friedman and Schwartz, the biggest mistake the Federal Reserve made during the 1930s was that it ____.
a. failed to act as the lender of last resort

b. waited too long to prick the bubble in the stock market

c. failed to stress the importance of combining monetary ease with fiscal prudence

d. waited too long to raise margin requirements

36. According to the class lecture one of the reasons for the poor performance of the Federal Reserve in the 1930s was the "power struggle" between ___.
 
a. the Reconstruction Finance Corporation and the Federal Reserve

b. the Federal Reserve and the Treasury

c. the Federal Reserve Board and the Federal Reserve Bank of New York

d. the Federal Reserve Bank of New York and the Federal Reserve Bank of Chicago

37. According to the class lecture, one of the problems the Federal Reserve faced in the 1930s was the "free gold problem" this was the idea that a. the price of gold had fallen so low that production of gold and other metals was uneconomic

b. the price of gold had risen so high that monetary expansion was impossible

c. public hoarding of gold was inhibiting recovery

d. the Federal Reserve might run short of gold if it expanded the money supply

 38. If we order the following periods – antebellum era, postwar era, Civil War, Great Depression -- in the order they occurred from earliest (left) to latest (right) we have.

a. antebellum era, postwar era, Civil War, Great Depression

b. Civil War, antebellum era, postwar era, Great Depression

c. Civil War, antebellum era, Great Depression, postwar era,

d. antebellum era, Civil War, Great Depression, postwar era

39. According to the traditional view of the Jacksonian inflation, Andrew Jackson was to blame because he weakened the Second Bank of the United States. This caused the inflation because

a. the Second Bank then started issuing paper money to make short-term profits before it was dissolved.

b. the Second Bank then began selling its reserves of gold and silver

c. it started a run on the dollar which led to a devaluation of the dollar

d. the Second Bank was then too weak to regulate the state banks

 40. Of the following, which does the modern view consider an important cause of the Jacksonian inflation? a. The overissue of paper money (more bank notes per dollar of reserves) by the state banks

b. The attack on the Second Bank of the United States by Andrew Jackson

c. The interest rate policy of the Bank of England

d. Political disturbances in Mexico

 41. In class I argued that the U.S. achieved an overwhelming level of military production in World War II primarily by _____. a. pushing the economy toward the production possibilities frontier

b. moving along the production possibilities curve from a primarily civilian economy to a mixed civilian and military economy

c. relying on high-tech military weapons that did not require substantial amounts of resources to produce

d. relying on imports of food, textiles, and other consumption goods while devoting domestic resources to military production

 42. From 1879 until 1896 the United States experienced a mild ___ even though the United States was on the gold standard. In class I attributed this (in part) to ___. a. deflation, technological progress in agriculture that was more rapid than technological progress in manufacturing

b. deflation, failure to find new supplies of gold

c. inflation, discovery of new gold supplies

d. inflation, technological progress in agriculture that was more rapid than technological progress in manufacturing

 43. Peter Temin argued that IF the Great Depression had been caused by the decline in the stock of money, nominal interest rates would have ____. And he noted that in fact nominal interest rates had ____ between 1929 and 1932

a. risen, risen

b. fallen, fallen

c. risen, fallen

d. fallen, risen

44. Most economic historians have accepted the argument that although nominal interest rates ____ between 1929 and 1932, the key point is that real interest rates

a. rose, fell

b. fell, rose

c. rose, rose

d. fell, fell

45. The idea that economic welfare is promoted by strict government controls on exports and imports is known as

a. Laissez faire

b. Mercantilism

c. Luddism

d. Marshallian economics

46. The failure of the South to employ the gang system of production on a widespread scale after the Civil War is generally attributed by economic historians to

a. the change in the crop mix away from single plantation crops to mixed agriculture

b. the unwillingness of the freed slaves to work under the gang system

c. the rise of industrialization in the South

d. taxes imposed by the Freedmen’s bureau on large plantations

47. The states that adopted "free banking" in the 1850s were sometimes afflicted by ______.

a. unusually low rates of capital formation

b. unusually high rates of interest

c. speculative stock market booms

d. wildcat banking

48. Robert Fogel based his counterfactual world of 1890 on

a. supply and demand curves derived from statistical tests

b. supply and demand curves assumed on the basis of economic theory

c. an assumption that the existing canal and waterway network could be deepened and improved to handle all 1890 shipments

d. canals and other waterway improvements proposed by the Corps of Engineers

 49. Robert Fogel concluded that the railroads had been ____.

a. indispensable to the economic growth of the United States

b. had almost doubled the real GDP of the United States

c. had increased the real GDP of the United States, but not enough to significantly change the standard of living

d. surprisingly, had actually slightly reduced real GDP in the United States, but not enough to significantly change the standard of living

50. Alfred Chandler argued that the main technological advance producing vertical integration of industrial firms at the turn of the nineteenth century was ____.

a. the railroad

b. the application of electricity to the generation of light and power

c. continuous flow production techniques

d. catalytic chemical processes

51. Alfred Chandler argued that the main technological advance producing horizontal integration of industrial firms in the late nineteenth century was ____.

a. the railroad

b. the application of electricity to the generation of light and power

c. continuous flow production techniques

d. catalytic chemical processes

52. In discussing how the burden of fighting was shared during the Civil War, the text (chapter 14) concludes that _____.

a. in the North the burden was shared roughly equally but in the South it was a rich man's war and a poor man's fight

b. in the South the burden was shared roughly equally but in the North it was a rich man's war and a poor man's fight

c. in both North and South it was a rich man's war and a poor man's fight

d. the burden of fighting was shared, to a remarkable extent, by all classes.

 53. Adam Smith argued in the Wealth of Nations that the mercantilists ___. a. wanted to build up the military power of the economy
b. wanted to produce full employment
c. had confused gold and silver with true wealth
d. were merely spokesmen for special interests 54. Of the following, which was the most important source of finance during the Revolutionary War a. taxes on alcohol and tobacco

b. borrowing from the public

c. income taxes (although income was not defined as broadly as it is today)

           d. printing paper money

55. According to chapter 25 (and a number of old exams!) most economists predicted in 1945 and 1946 that after the war ___.

a. there would be a long boom due to the pent up demand for consumer durables
b. there would be a long boom due to the build up of liquid assets during the war
c. there would be a depression due to the cut back of wartime spending
d. there would be a depression due to the abandonment of interest rate pegging 56. During the period 1800 to 1860 many people were concerned about speculation in public lands. One of the chief policies advocated for preventing speculation was _____. a. prohibiting foreigners from owning land
b. requiring the Interior department to review and approve all and sales
c. setting a high price for federal land
d. setting a low (but positive) price for federal land 57. Albert Fishlow argued that the Midwestern railroads ___ because ___. a. had been built ahead of demand, profit rates were high immediately after the opening of the RR

b. had not been built ahead of demand, profit rates were high immediately after the opening of the RR

c. had been built ahead of demand, population densities near RRs were low until years after completion

d. had not been built ahead of demand, population densities near RRs were low until years after completion

 58. Of the following, which was the number one source of finance during World War I? a. taxes on alcohol and tobacco

b. borrowing from the public

c. income taxes (although income was not defined as broadly as it is today)

           d. printing paper money

59. Benjamin Franklin defended the use of paper money during the Revolutionary War by comparing the resulting inflation to a tax. Which of the following does not belong in the list of benefits Franklin claimed for the inflation tax? The tax ____.

a. was easy to collect

b. was levied on virtually everyone

c. was fair because it was proportional to wealth

d. was fair because it did not fall on people on fixed incomes

60. Consider the following diagram which shows the supply and demand for soldiers during the Revolution. The continental Congress's demand for soldiers is EF, and the wage it pays is EC. In class I argued that with conscripts and substitution total amount of all bounties would rise toward ___ , and the average amount of the bounty would rise toward ___.

(I wasn't able to put this one on the website. Please check your class notes.)

61. Yasukichi Yasuba stressed the distinction between the profitability of slavery and the viability of slavery. Of the following measures which would be the most likely to tell us something about viability?

a. the ratio of cotton prices to slave prices
b. the ratio of slave hire rates to slave prices
c. the ratio of the value of the marginal product of slaves less their maintenance costs to slave prices
d. the ratio of slave hire rates to the costs of rearing a slave to maturity

62. In class U.B. Phillips's conclusion about the profitability of slavery was criticized because his proxy for profitability ignores

a. changes in the price of cotton

b. changes in productivity

c. changes in non-monetary costs of slavery

d. alternative rates of return
 

63. Alfred Conrad and John Meyer claimed that slavery in the old South was made profitable by

a. the East-West slave trade

b. the low price of imported slaves

c. specialization in "long staple" cotton

d. Federal government tobacco subsidies
 

64. Robert Evans used the ______ to measure the annual net revenue generated by slaves.

a. the output per slave worker (from census records) multiplied by the price of the agricultural products produced by slave workers less the costs of maintaining them

b. the average net income of free Blacks in the South

c. the rate paid by railroads to slaveholders to rent slave

d. net plantation income (from plantation records) divided by the number of slaves on the plantation

65. In general Alfred Conrad and John Meyer, Robert Evans, and Robert Fogel and Stanley Engerman found that slavery was generally ______ than alternative investments.

a. as profitable or more profitable

b. less profitable

c. more profitable in the early years of the nineteenth century but less profitable as 1861 approached

d. less profitable in the early years of the nineteenth century but more profitable as 1861 approached

66. According to the class lecture (and the text), most slaves were brought from Africa to the New World to ___.

a. grow cotton

b. grow coffee

c. grow sugar

d. mine gold and silver

67. In class we noted that the United States took possession of a relatively small share of the Africans enslaved and brought to the new world, yet by 1825 the United States held more slaves than any other country. In class I attributed the resolution of this paradox primarily to ______.

a. the better treatment of slaves in the US because of the influence of the Quakers

b. the smuggling of slaves into the US through Texas

c. the return of large numbers of slaves from countries south of the US to Africa when they could no longer work efficiently

d. the high mortality rate due to disease in the Carribean and Latin America


68. According to most economic historians, the key fact about southern agriculture that made it more suitable to slavery than northern agriculture was that in the south ___

a. the growing season was longer, which was consistent with the slow pace at which slaves worked

b. slaves on plantations could be kept together in the fields, minimizing the costs of monitoring and controlling them

c. the crops that grew well required abundant cheap labor

d. the cost of maintaining slaves (the cost of food, clothing, and shelter) were lower becauseof the warm climate

 69. Richard Steckel found that in general slaves were ______. a. well fed during childhood and working years because this was in the interest of slaveowners, but were mistreated in old age

b. born at normal weights and well fed throughout life because it was in the self interest of slave owners to follow this policy

c. were born underweight but were well fed during childhood, and most of their adult life

d. born underweight and were malnourished during childhood, but well fed as they approached adulthood

 70. Ben Bernanke argued that one reason the Great Depression was so bad was that a. business forecasts were all based on a few indicators that all pointed down

b. bank lending declined because borrowers lacked adequate collateral

c. businessmen were afraid to invest because of "that man in the White House."

d. unions refused to agree to reasonable wage cuts
 
 

 71. Here are some figures on nominal and real interest rates in the 1930s. The real interest rate exceeds the market rate because ___.
 
  Market 

Interest rate

 Real interest

Rate
1929 5.78 5.78
1930 3.55 6.15
1931 2.63 12.20
1932 2.72 13.55

a. prices were rising

b. prices were falling

c. industrial production was falling

d. real wages were rising

72. When economists talk about the Federal Reserve acting as a "lender of last resort" they are talking mainly about having the Federal Reserve lend money to ____ that are in financial trouble

a. banks
b. government programs such as unemployment insurance
c. states
d. any businesses (although usually a big business such as a railroad)

73. According to a number of critics of Federal Reserve behavior during the 1930s (and of the Bank of Japan today), the Fed made a mistake because it used _____ as an indicator of whether its policies were easy or hard.

a. market interest rates
b. real interest rates
c. prices
d. real wages

74. Which of the following statements best describes the ratio of total federal spending to GNP in the twentieth century?

a. It rose steadily in the twentieth century; the depression and world war II had little impact.

b.It fell steadily in the twentieth century; the depression and world war II had little impact.

c. It rose rapidly in the depression and WWII and trended upward for most of the postwar era.

d. It rose rapidly in the depression and WWII, but has trended downward during most of the postwar era.

 75. Robert Higgs, a conservative economic historian, believed that after wars, the government did not return to its prewar size in part because ____. a. special interests were created that fought for agencies created during the crisis

b. people had realized that they benefited from the new agencies created in the war

c. people were subject to money illusion (big nominal cuts were actually small real cuts)

d. crises usually brought the Democrats to power, and they favor bigger government

 76. Arthur Schlesinger Jr., a liberal historian, believed that after wars, the government did not return to its prewar size in part because ____. a. special interests were created that fought for agencies created during the crisis

b. people had realized that they benefited from the new agencies created in the war

c. people were subject to money illusion (big nominal cuts were actually small real cuts)

d. crises usually brought the Democrats to power, and they favor bigger government

 77. Of the following, the most accurate statement of Wagner's Law (one of the most reliable generalizations in economics) is that a. real government spending will grow over time

b. nominal government spending will grow over time

c. central government spending will grow relative to GDP

d. central government spending will grow relative to private investment

 78. Which of the following was cited by Adolf Wagner (according to the class lecture) as one of the main reasons central governments would expand a. crises, such as depressions, would produce increases in government spending that would be only partially reversed afterwards because new special interests would be created

b. crises, such as depressions, would produce increases in government spending that would be only partially reversed after wards because people would get used to higher taxes

c. unemployment would become more severe in each "crisis of capitalism," requiring larger and larger doses of government spending to cure them

d. arms races would become more and more expensive
 
 

 79. In the post-WWII era taken as a whole, the main source of growth in the Federal government relative to GDP has been in

a. military spending

b. transfer payments

c. increases in the number of civilian employees

d. increases in the salaries of civilian employees

80. Which of the following statements best describes the share of federal employees in the total labor force in the twentieth century?

a. It rose steadily in the twentieth century; the depression and world war II had little impact.

b.It fell steadily in the twentieth century; the depression and world war II had little impact.

c. It rose rapidly in the depression and WWII and trended upward for most of the postwar era.

d. It rose rapidly in the depression and WWII, but has trended downward during most of the postwar era.
 

 81. According to the lecture, the Royal Proclamation of 1763 _______ and particularly disillusioned _________.

a. prohibited the issue of paper money, bankers

b. restricted western settlement, young male immigrants

c. taxed the importation of molasses, New England merchant seamen

d. subsidized exports of timber, Massachusetts ship makers

e. restricted sales of video games, Generation X

82. The idea that regional specialization, especially of the South in cotton production, was the source of U.S. growth before the Civil War is known as the ______ for the Nobel prize winning economist who first developed the idea.

a. the North Thesis

b. the Fogel Thesis

c. Wagner’s law

d. the Beard-Hacker Thesis

e. the Rockoff Thesis

83. Under the gold standard a country whose prices rose above those in the rest of the world – for example because its government had issued a lot of paper money -- would find that it would ___ gold, and that its prices would ___.

a. lose, fall into line with the rest of the world

b. lose, rise still farther out of line with the rest of the world

c. gain, fall into line with the rest of the world

d. gain, rise still farther out of line with the rest of the world

 84. The keys on the upper left of a keyboard are _____ and their mysterious origins are often brought up in discussions of ____.

a. QUEWRT, Path Irrelevance

b. ASDFGH, Path Irrelevance

c. QWERTY, Path Dependence

d. TYUIOP, Path Dependence

e. &*()K$, not every question can be a winner

85. After the Civil War the southern sharecropper was often tied to the land by an economic system similar to although less onerous than slavery, and known to economic historians as ______.

a. anticipatory settlement

b. indentured servitude

c. debt peonage

d. the Sea Islands system

86. William Jennings Bryan said "Thou Shalt Not Crucify Mankind Upon a Cross of Gold." He believed that the gold standard was a cross of gold because the gold standard had produced ___ which hurt ___.

a. inflation, workers

b. deflation, banks

c. inflation, small businesses

d. deflation, farmers
 

 87. In the text there is a picture of the statue to the boll weevil in Enterprise Alabama, because ___. a. Enterprise became the center of a thriving pesticide business

b. Farmers turned to peanuts which proved profitable

c. Farmers moved to the North, and sent home money to help family and friends

d. The Federal government set up a research institute that created more jobs than had been lost

e. I can’t believe I missed this one again
 

 88. The text (Chapter 26) considers the growth of Federal spending in the postwar period. It concludes that over the period 1949-1985 _______. a. both transfer payments and spending on government purchases of goods and services grew rapidly relative to GNP

b. neither transfer payments nor spending on government purchases of goods and services grew rapidly relative to GNP

c. transfer payments grew rapidly relative to GNP but government purchases of goods and services did not

d. government purchases of goods and services grew rapidly relative to GNP but transfer payments did not

 89. The central argument of Keynes's Economic Consequences of the Peace, according to the class lecture was that _____. a. ending the gold standard would lead to chronic inflation

b. heavy reparations imposed on Germany would produce bitterness in Germany and another war

c. ending the gold standard would lead to chronic deflation

d. ending war contracts would lead to mass unemployment

 90. The priorities system of World War I was intended to tell ____. a. manufacturers the order in which they should finish work for which they had accepted orders

b. manufacturers the crucial standards that any particular weapons system should meet

c. price controllers which prices to spend the most effort controlling

d. price controllers which commodities should be rationed

 91. A major problem with the Priorities system initiated by the War Industries Board in World War I, that I discussed in class, was a. political favoritism

b. the overissue of high priorities

c. quality deterioration

d. inadequate penalties for violators

 92. In the Economic Consequences of the Peace, Keynes argued that in order for Germany to make the required transfers she would have to increase her ___ and this would be hard because (in part) ___. a. imports, German producers of import competing goods would lobby for protection

b. exports, foreign producers of import competing goods would lobby for protection

c. money supply, the public would be outraged by inflation

d. interest rates, the public would be outraged by high unemployment
 

 93. The text (chapter 23) discusses the possibility of another Great Depression. It concludes that a repetition is ______ today because ________. a. possible, the policy lessons of the 1930s have been forgotten

b. possible, we are still vulnerable to shocks to the stock market

c. unlikely, we are unlikely to repeat the same mistakes with respect to monetary and fiscal policy

d. unlikely, we are now a smaller part of the world economy

 94. According to chap. 23 Keynesian economists would probably argue that Keynesian policies failed to alleviate the Great Depression because _____. a. monetary policy was contractionary

b. government spending was disproportionately concentrated on poor relief

c. supply-side shocks offset Keynesian policies

d. the deficits were not big enough

           e. You said we didn’t have to read the text

95. Chap. 24 discusses the overall effect of New Deal farm measures. The text concludes that the New Deal _____.

a. failed to help farmers because the farmer's terms of trade did not improve.

b. helped the farmer to a limited extent primarily through the stimulation of aggregate demand

c. helped the farmer to a substantial extent by limiting farm output

d. helped the farmer to a substantial extent by helping to increase farm output
 

 96. The Beard-Hacker Thesis claims that postbellum economic growth in the United States was _____.

a. slowed by rapid immigration

b. accelerated by rapid immigration from English speaking countries

c. slowed by the formation of industrial monopolies

d. accelerated by Civil War economic legislation and financial policies

97. During the Civil War prices rose more ______ in the North than in the South, a result that I attributed to the fact that the money supply rose more ______ in the North than in the South.

 
a. rapidly, rapidly

b. rapidly, slowly

c. slowly, rapidly

d. slowly, slowly

 98. For the tenant in the Post-bellum south the advantage of sharecropping compared with renting for cash was that probably explains the widespread adoption of this form of tenancy a.the sharecropper's output was less dependent on rain and other "forces of nature"

b.the sharecropper realized all of the gains from extra effort

c. sharecropping required more capital than renting

d.under sharecropping the landlord absorbed part of the risk of a bad harvest.
 

 99. The South produced ______ cotton in the 1880s than before the Civil War because _______.

a. more, sharecroppers were more productive than slaves

b. less, sharecroppers, especially women and children worked fewer hours than slaves

c. more, storeowners insisted on cash crops

d. less, Egypt and India captured a substantial share of the market

100. According to the class lecture the real message of the Wizard of Oz is that ______.

a. Adopting bimetallism would solve the farmer’s economic problems

b. paper money is only a delusion foisted on the people by governments

c. the battle over the monetary standard in the 1890s was a delusion that diverted people from consideration of

the real issues.

d. the gold standard is the only road to long run economic health

e. Not this again
 
 
Correct Answers
1. C 26 D 51 A 76 B
2. D 27 D 52 C 77 C
3. A 28 A 53 C 78 D
4. A 29 B 54 D 79 B
5. C 30 C 55 C 80 D
6. B 31 C 56 C 81 B
7. B 32 A 57 B 82 A
8. B 33 B 58 B 83 A
9. D 34 B 59 D 84 C
10. A 35 A 60 C 85 C
11. A 36 C 61 D 86 D
12. D 37 D 62 B 87 B
13. D 38 D 63 A 88 C
14. B 39 D 64 C 89 B
15. C 40 D 65 A 90 A
16. D 41 A 66 C 91 B
17. B 42 B 67 D 92 B
18. A 43 C 68 B 93 C
19. C 44 B 69 D 94 D
20. D 45 B 70 B 95 C
21. C 46 B 71 B 96 D
22. A 47 D 72 A 97 D
23. A 48 D 73 A 98 D
24. C 49 C 74 C 99 C
25. B 50 C 75 A 100 A