American Economic History Final FINAL FINAL

In class I argued that the costs of constructing the Union Pacific were much higher than was really necessary because _____. a. officials of the Union Pacific were shareholders in the construction company that built the railroad b. of rules imposed by the Federal government which made it costly to use immigrant workers c. of threats to strike by unionized workers d. the rails had to be imported from Germany and had to pay high tariffs

a. officials of the Union Pacific were shareholders in the construction

On the whole, the period of U.S. neutrality in WWI (from the outbreak of the war until entry by the U.S.) was a period of unusual ___. a. prosperity for U.S. agriculture and industry b. prosperity for U.S. agriculture, but depression for U.S. industry c. depression for U.S. agriculture, but prosperity for U.S. industry d. depression for both U.S. agriculture and industry

a. prosperity for U.S. agriculture and industry

According to the "rules of the gold standard game" the central bank of a country on the gold standard that is running a balance of payments deficit should ____. a. raise the interest rate it charges on loans b. lower the interest rate it charges on loans c. buy government bonds d. buy private debt

a. raise the interest rate it charges on loans

In WWI sugar was an unusual commodity because the Food Administration used ______ to allocate sugar. a. ration tickets b. legalized black (gray) markets c. legalized tie-in sales d. legalized quality deterioration

a. ration tickets

The First Banking Crisis in the United States in the 1930's involved mainly a. rural banks in the Midwest. b. large European banks c. New York banks, but not Wall Street Banks d. Banks all over the country; it hit randomly

a. rural banks in the Midwest.

What is the theme song of Roosevelt administration, associated with repeal?

"Happy days are here again The skies above are clear again So lets sing a song of cheer again Happy days are here again."

Roosevelt's Second Inaugural

"I see one-third of a nation illhoused, ill-clad, ill-nourished."

President Calvin ("Silent Cal") Coolidge: "The Business of America is _____."

"The Business of America is business."

Stock Market Crash + Banking Panics = Great Depression -> What does this mean?

"The source of the continued decline in production in the United States was almost surely a series of banking panics."

Bagehot's Rule

"in time of panic it [the Bank of England] must advance [lend money] freely and vigorously to the public out of the reserve."

What was the famous stock market prediction two weeks before the crash?

"the stock market has reached a permanently high plateau"

Consider the following table which shows values of the stock of money in 1861, the beginning of the Civil War, and in 1865, the end of the War. The column for the North is correct. Choose the correct column for the South.

$130 -> $1085 Hyperinflation

How much would the cost of the War be in today's dollar?

$31 billion • x (consumer price index today/consumer price index 1918) = $487 billion • x (wages today/wages 1918) = $2.6 trillion • x (GDP today/GDP 1918) = $7.0 trillion $31 x ($17,348/77) = $6,984 billion

In class I discussed (a) the period of mild deflation from 1879 to 1896 and (b) the period of mild inflation from 1896 to 1914. In general I concluded that there was ____. a. more dissatisfaction with the functioning of the monetary system during (a) than during (b) b. more dissatisfaction with the functioning of the monetary system during (b) than during (a). c. about the same level of dissatisfaction in both periods. d. growing dissatisfaction over both periods

a. more dissatisfaction with the functioning of the monetary system during (a) than during (b)

Under the classical gold standard exchange rate were fixed because each country on the gold standard a. bought and sold gold at a predetermined price in terms of its own currency b. set its price of gold equal to the world market price c. altered the domestic price of gold to offset changes in exchange rates d. altered the domestic price of gold to offset changes in the price level

a. bought and sold gold at a predetermined price in terms of its own currency

Consider the following table of values for the private rate of return and the social rate of return to capital invested in the Union Pacific railroad. (These are not the actual figures shown in class, but rather a slightly different set of figures to test your understanding.) Given these figures we can conclude that the railroad was __________ and that government subsidies _____? a. built ahead of demand, justified b. not built ahead of demand, not justified c. built ahead of demand, not justified d. not built ahead of demand, justified

a. built ahead of demand, justified

During World War II most economists predicted that after the war there would be ___. a. depression owing to the cut back of wartime spending b. depression owing to the abandonment of interest rate pegging c. long boom owing to the pent up demand for consumer durables d. long boom owing to the build up of liquid assets during the war

a. depression owing to the cut back of wartime spending

After weighing the costs and benefits of the Navigation Acts and other parts of the old colonial policy the lecture and the text concluded that these restrictions ____. a. imposed only a small net burden on the colonies as a whole, one too small to push people toward Revolution b. imposed a large burden, one that was a major cause of the Revolution c. imposed a large burden on the North, but actually benefited the South, explaining the failure of the South to support the Revolution d. surprisingly, actually made the colonists better off, as they learned to their sorrow after the Revolution.

a. imposed only a small net burden on the colonies as a whole, one too small to push people toward Revolution

The Populists wanted to ____ the supply of money in order to ___ prices, and so reduce the burden of farm mortgages a. increase, increase b. increase, decrease c. decrease, increase d. decrease, decrease

a. increase, increase

After the election of 1896 the United States experienced ______ for the next decade because of _____. a. inflation, the discovery of gold in South Africa b. inflation, the formation of American Tobacco and other trusts c. deflation, the increase in the rate of immigration d. deflation, widespread use of continuous flow production processes

a. inflation, the discovery of gold in South Africa

In the Supreme Court Case, Munn vs. Illinois, the court decided that ___. (reading question) a. it was O.K. for Illinois to regulate the prices charged at Munn's grain elevator. b. it was unconstitutional to regulate the prices charged at Munn grain elevator. c. it was O.K. for Illinois to prohibit Munn from organizing workers at the Pullman railroad car factory (special cars for sleeping) d. it was unconstitutional for Illinois to prohibit Munn from organizing workers at the Pullman factory

a. it was O.K. for Illinois to regulate the prices charged at Munn's grain elevator.

In class I argued that there were two approaches to the bombing of Germany in WWII. One emphasized destroying ____ while the other emphasized destroying ___. a. key industries such as ball bearings, large amounts of labor and capital to reduce output b. infrastructure (bridges, railroads), telecommunications c. cultural institutions in Germany to undermine morale, large amounts of labor and capital to reduce output d. cultural institutions in nations allied with Germany to break the alliance, infrastructure (bridges, railroads, etc.)

a. key industries such as ball bearings, large amounts of labor and capital to reduce output

The development of national banking in the South after the Civil War was inhibited by (lecture and reading question) a. large capital requirements of the National Banking Act b. low interest rates in agriculture c. the inability of these banks to issue banknotes d. the policy of the Federal Reserve System

a. large capital requirements of the National Banking Act

The idea of a lender of last resort, as defined by Walter Bagehot, is that the central bank should ____. a. lend freely to banks during panics b. maintain the same lending policies during panics and ordinary times c. lend only to the government during financial panics, and the government should then decide which financial institutions should be saved d. lend to "real" corporations (companies that manufacture automobiles, refrigerators, computers, etc.) during financial panics as well as banks, but in normal times should lend only to banks

a. lend freely to banks during panics

Bagehot's rule is that the central bank should _____. a. lend money freely during a panic b. maintain a stable price level c. decrease interest rates if gold is flowing out of the country, and increase interest rates if gold is flowing in d. increase money and credit at a slow, stable rate in good times and bad

a. lend money freely during a panic

J. Hayden Boyd and Gary Walton estimated the social savings of railroad passengers in 1890 and found that it was _______. (Reading question and lecture) a. less than 3 percent of GNP b. between 3 and 5 percent of GNP c. between 5 and 10 percent of GNP d. more than 10 percent of GNP (GNP was about the same as GDP)

a. less than 3 percent of GNP

There is a statue to the boll weevil in Enterprise Alabama, because ___. (Reading question) 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. did not rise substantially in either the First or Second Industrial Revolutions

b. Farmers turned to peanuts which proved profitable

As a percentage of total expenditures the most important source of revenues in World War II was ____ (Reading Question) a. taxes b. borrowing from the public c. creating new money d. refinancing debt at lower interest rates

a. taxes

According to Alfred Chandler the most important economic development leading to the growth of Big Business in the period 1869-1900 was a. the development of continuous flow technologies b. the passage of tariff laws, bankruptcy laws, and other pro-business legislation c. the extension of the railroad network d. the rise of investment banking

a. the development of continuous flow technologies

The "misery index" according to the class lecture can be measured as ____. a. the rate of inflation plus the rate of unemployment b. the rate of inflation plus the rate real rate of interest c. the percentage change in per capita income less the percentage change in inflation d. the rate of unemployment and the percentage of Americans below the poverty line f. the number of years a student has spent at Rutgers

a. the rate of inflation plus the rate of unemployment

The Union Pacific railroad had to be physically rebuilt several years after it was completed. In class I attributed this mainly to ___. a. the use of unskilled immigrant labor to build the railroad b. the use of land grants to encourage construction of the RR c. the use of cash subsidies to encourage construction of the RR d. the spirit of competition that developed between the team building West and the team building East.

c. the use of cash subsidies to encourage construction of the RR

There were two basic provisions in the free banking laws passed in the 1850s (1)______ and (2)_______. a. banks must be approved by the state legislature, notes must be backed by government bonds b. notes must be backed by government bonds, deposits must be backed by notes of other banks or specie c. anyone can start a bank if they can raise the minimum capital, increases in note issues must be approved by the state legislature d. anyone can start a bank if they could raise the minimum capital, notes must be backed by government bonds

d. anyone can start a bank if they could raise the minimum capital, notes must be backed by government bonds

According to the text (some stuff you read on the internet doesn't count) the Missouri Compromise of 1820, among other things, a. ended the slave trade in Washington D.C. and brought Missouri into the union as a slave state b. brought Ohio and Indiana into the union as free states, but banned slavery in territories west of the Missouri river c. permitted slavery in territories east of the Missouri river and banned slavery west of the Missouri d. brought Missouri into the union as a slave state, and Maine as a free state

d. brought Missouri into the union as a slave state, and Maine as a free state

Albert Fishlow thought that his findings refuted the idea of Joseph Schumpeter that the Midwestern American railroads had been ______. a. a permanent drag on the economy b. an example of science driven technical change c. an example of factor price driven technical change d. built ahead of demand

d. built ahead of demand

One reason, stressed in class, for the ability of the United States to increase munitions productions so rapidly and on such a large scale in World War II was that ______. a. the United States got rid of the price system and relied on central planning b. the willingness of Americans to work long hours out of patriotism c. the ability of the United States to rely on blueprints and experience from Britain which had already mobilized d. there were still underemployed resources available because of the Depression

d. there were still underemployed resources available because of the Depression

What was the leading commodity export by value of the American colonies in the late colonial period? What commodity was in second place? (Reading question). a. tobacco, rice b. corn, fish c. rice, tobacco d. tobacco, bread and flour g. cookies, milk

d. tobacco, bread and flour

In World War I price controls on basic foods such as wheat tended to produce shortages. To solve this problem the authorities relied on. a. ration tickets b. price increases c. draconian penalties for black marketers d. voluntary campaigns to reduce consumption of important foods

d. voluntary campaigns to reduce consumption of important foods

During the first phase of strategic bombing in World War II, the Allies emphasized ____, while during the second phase they emphasized ____. a. massive destruction of the German and Japanese economies, key targets such as ball bearings b. raw materials such as coal and oil, munitions c. munitions, raw materials such as coal and oil d. key targets such as ball bearings, massive destruction of the German and Japanese economies

d. key targets such as ball bearings, massive destruction of the German and Japanese economies

The first banking crisis in the U.S. during the Great Depression and the first banking crisis in Austria during the Great Depression both seemed to be caused, according to the class lecture, by _____. a. waves of strikes in manufacturing b. high interest rates due to restrictive monetary policy c. cutbacks in government spending d. low prices for agricultural products

d. low prices for agricultural products

According to the lecture and to the text the Interstate Commerce Commission was "captured" by _____. a. federal bureaucrats b. the railroads themselves c. farmers d. major producers of industrial products

d. major producers of industrial products

According to the "North Thesis" (named for the distinguished economic historian Douglas North) after the Revolution, the Northeastern states such as Massachusetts, specialized in ___, the Midwestern states such as Ohio specialized in _____ and the Southern states such as Virginia specialized in ______. a. non-food cash crops, manufacturing, food production b. food production, non-food cash crops, manufacturing c. manufacturing, non-food cash crops, food production d. manufacturing, food production, non-food cash crops

d. manufacturing, food production, non-food cash crops

In the decades after the Civil War the South grew _____ cotton than before primarily because ________. a. less, the price of cotton fell b. more, the price of cotton rose c. less, freedman wanted to diversify their crops d. more, storeowners preferred a lien on cotton

d. more, storeowners preferred a lien on cotton

Robert Fogel calculated the social savings of the railroads for the year 1890. He chose this year because _____. a. there was an unusually hard winter, thus making it easy to calculate the benefits of allweather transport b. it was chosen randomly to make sure that the calculations would not be biased in any way c. after 1890 some of the Railroads were broken up (under the Sherman Act) and as a result they were less efficient. d. most significant markets had been linked by railroads by 1890

d. most significant markets had been linked by railroads by 1890

Canada has had ______. a. the same number of panics as in the United States because anything big that happens in the United States also happens in Canada b. essentially one financial panic: in the Great Depression c. essentially one financial panic: in 2008 d. no financial panics

d. no financial panics

The tendency of the Federal Reserve to focus on a misleading indicator of monetary policy, namely ____, has also been blamed for the failure of the Federal Reserve to increase the money supply during the early years of the Depression. a. the money supply b. bank reserve ratios c. real interest rates d. nominal interest rates

d. nominal interest rates

During the Populist era the terms of trade turned against the farmer. In class I measured the farmer's terms of trade as the ___. a. exchange rate between dollars and pounds b. value of farm output divided by the consumer price index c. real value of farm output divided by the real value of non-farm output d. price of wheat divided by the Consumer price index

d. price of wheat divided by the Consumer price index

In class I argued that the localized markets that existed before the Civil War provided a form of insurance for farmers because ____. a. neighbors would try to help out farmers when there was a poor harvest b. surpluses could be exported when there was a good harvest c. local politicians would introduce aid bills in Congress when there was a poor harvest d. prices of agricultural products would rise when there was a poor harvest

d. prices of agricultural products would rise when there was a poor harvest

Oddly enough both Western farmers and Wall Street bankers were opposed to the Second Bank of the United States. Wall Street financiers opposed the Second banks of the United States because they believed that the Second Bank ___. a. kept interest rates too high b. kept interest rates too low c. bailed out weak banks and thus prevented Wall Street Banks from taking over weak banks d. should have its headquarters on Wall street not Chestnut street. e. produced an inflationary currency

d. should have its headquarters on Wall street not Chestnut street.

The Treasury-Federal Reserve Accord of 1951 was an agreement ______. a. that committed the Federal Reserve to keeping the rate of interest at or below 5 percent per year b. that committed the Federal Reserve to keeping the rate of interest at or above 5 percent per year c. that committed the Federal Reserve to buying up government bonds as long as they were selling below an agreed fixed price d. that allowed the Federal Reserve to refuse to buy government bonds if the Federal Reserve thought that doing so would be detrimental to the economy

d. that allowed the Federal Reserve to refuse to buy government bonds if the Federal Reserve thought that doing so would be detrimental to the economy

The "Hold the Line Order" in World War II refers to the Presidential order ____. a. that required the Fed to peg interest rates. b. requiring firms to hold their prices at a the same level as in the month before the order was issued. c. limiting the use of raw materials in non-essential production. d. that required the Office of Price Administration to deny most price increases and set dollar and cents prices. f. that required Notre Dame to stand firm against Ohio State on the one yard line.

d. that required the Office of Price Administration to deny most price increases and set dollar and cents prices.

In class I noted that Sherman's "March to the Sea" was made possible by a. the belief in the South that trench warfare was not gentlemanly b. the North's ability to construct railroad track at a high rate c. the North's control of ocean shipping d. the South's high agricultural productivity

d. the South's high agricultural productivity

The labor force participation of women increased between 1940 and 1950 for several reasons. Which was not among the reasons discussed in class? a. Some Rosies decided to remain in the workforce b. the clerical sector grew rapidly c. employer learned that women could be productive workers. d. the Taft-Hartley Act required employers with government contracts to allocate one-third of all jobs to women and minorities

d. the Taft-Hartley Act required employers with government contracts to allocate one-third of all jobs to women and minorities

For the tenant in the Postbellum South the advantage of cash renting compared with sharecropping was that ____. a. cash renting required less capital than sharecropping b. under cash renting the landlord absorbed part of the risk of a bad harvest. c. the cash renter's output was less dependent on rain and other "forces of nature" d. the cash renter realized all of the gains from extra effort

d. the cash renter realized all of the gains from extra effort

In 1869 the "golden spike" was driven into the ground. This symbolized a. the completion of the Wabash and Southern railroad reuniting the North and South after the Civil War b. the completion of the Baltimore and Ohio railroad reuniting the North and South after the Civil War c. the inauguration of construction on the Acheson, Topeka, and Santa Fe railroad uniting the eastern and western parts of the United States d. the completion of the Union Pacific Railroad uniting the eastern and western parts of the United States

d. the completion of the Union Pacific Railroad uniting the eastern and western parts of the United States

During the Revolutionary War privateers were ____. a. small government owned ships that preyed on British commercial shipping b. small government owned ships that tried to end the British blockade by attacking British warships when they neared American waters c. small privately owned ships that preyed on British commercial shipping d. small privately owned ships that tried to end the British blockade by attacking British warships when they neared American waters

c. small privately owned ships that preyed on British commercial shipping

The price level began to rise after 1896 until World War I. In class I attributed this rise in part to a. federal Reserve policies b. bank of England policies c. discoveries of gold in Argentina d. the cyanide process for extracting gold from gold ore

d. the cyanide process for extracting gold from gold ore

Which of the following is true about the stock market boom of the 1920s? a. the market has never regained the peak reached in 1929 b. the market regained the 1929 peak during the mid-1930s. c. the market regained the 1929 peak shortly after Pearl Harbor d. the market regained the 1929 peak in a few years after the end of World War II

d. the market regained the 1929 peak in a few years after the end of World War II

After the Civil War two experiments were made with land reform at _________. These experiments are generally regarded by economic historians as _______ . a. the Jefferson Davis plantation and the Robert E. Lee plantation, successes b. the Jefferson Davis plantation and the Robert E. Lee plantation, failures c. the Jefferson Davis plantation and the Sea Islands of Georgia, successes d. the Jefferson Davis plantation and the Sea Islands of Georgia failures

c. the Jefferson Davis plantation and the Sea Islands of Georgia, successes

In 1896 William Jennings Bryan declared "thou shall not crucify mankind upon a cross of gold." In this statement who is meant by thou? a. the Democratic party b. the Populist party c. the Republican party. d. the Whig party

c. the Republican party.

The class lecture and the text attribute the inflation of World War I to a. the shortages of raw materials, particularly iron and coal b. the labor shortage and resultant high wages c. the increase in the money supply d. the capital shortage and the resultant high level of interest rates

c. the increase in the money supply

Midwestern farmers often benefited from the coming of the railroads because it was then easier to market their products. Robert Fogel attempted to measure the impact of this benefit by examining ___. a. the profits of transportation industries as a group b. the profits of railroads compared with the profits of canals c. the rental price of farm land in the Midwest d. the change in real GDP before and after the railroads were built

c. the rental price of farm land in the Midwest

Which of the following was part of the "intolerable acts" that led to the Revolutionary War? (Reading question). a. provided for a levy (draft) of colonial soldiers to defend the frontier against attacks from native Americans b. closed the port of Boston until the colonists paid for the tea destroyed in the Boston Tea Party c. placed a stamp tax on all legal documents d. closed inter-coastal slave trade. (Colonists could buy slaves from Britain, but not from another American colony).

b. closed the port of Boston until the colonists paid for the tea destroyed in the Boston Tea Party

According to the class lecture the introduction of Federal Deposit insurance _______. a. had surprisingly little impact on the rate of bank failure b. contributed to a major reduction in the number of bank failures c. substantially increased the number of bank failures by making bankers careless about who they lent to d. substantially increased the number of bank failures by encouraging by discouraging the Federal Reserve from bailing out troubled banks

b. contributed to a major reduction in the number of bank failures

The introduction of Federal deposit insurance in the 1930s, according to Milton Friedman and Anna J. Schwartz (and the class lecture!), seems to have ___ a. had surprisingly little impact on the rate of bank failure b. contributed to a major reduction in the number of bank failures c. substantially increased the number of bank failures by making bankers careless about who they lent to d. substantially increased the number of bank failures by encouraging by discouraging the Federal Reserve from bailing out troubled banks

b. contributed to a major reduction in the number of bank failures

In general the trend from the Revolution through the Civil War was for the price at which federal land could be purchased to ___ and the minimum required purchase to ___. a. increase, increase b. decrease, decrease c. increase, decrease d. decrease, increase

b. decrease, decrease

In general the trend from the Revolution to the Civil War was for the price at which federal land could be purchased to ___ and the minimum required purchase to ___. a. increase, increase b. decrease, decrease c. increase, decrease d. decrease, increase

b. decrease, decrease

The shape of the "Engel Curve" is important to farmers. The Engel curve shows the relationship between _______ and ________.(Reading question.) a. dollars expended on food, the price of food b. dollars expended on food, and the level of income c. the price of food, and the consumer price index d. the price of food, and an index of growing conditions

b. dollars expended on food, and the level of income

Robert Fogel's conclusion from his study of the impact of the railroads was that ___. a. the railroads were indispensable to the economic growth of the United States b. even without the railroads the U.S. would have been a rich nation, but the railroads still made a positive contribution c. the net contribution of the railroads was close to zero because the positive effects of the reduction in transport costs were offset by environmental damage d. the railroads actually retarded U.S. economic growth by drawing resources into transportation, a sector that was already highly efficient

b. even without the railroads the U.S. would have been a rich nation, but the railroads still made a positive contribution

In terms of the balance of trade mercantilists aimed at ____. a. exports equal to imports b. exports greater than imports c. imports greater than exports d. none of the above

b. exports greater than imports

The famous economist Irving Fisher _____ prohibition because he thought it _____. a. favored, would reduce the likelihood that Congress would impose more obnoxious restrictions on daily life such as restrictions on what people could read. b. favored, would increase labor productivity c. opposed, would produce disrespect for the law and an increase in crime d. opposed, was disrespectful toward people for whom alcohol consumption was part of their traditional culture.

b. favored, would increase labor productivity

According to the Keynesian interpretation of the 1930's, the main reason we still had double digit unemployment in 1939 was that _____. a. interest rates were too high relative to the long-term average b. federal budget deficits were too small relative to the total economy c. the stock of money was too small relative to the long-run average d. investment spending was too high compared with consumption spending

b. federal budget deficits were too small relative to the total economy

In class I argued that poor Irish immigrants to the United States stood to ______ economically if the United States won its freedom from England mainly because _____. a. gain, laws permitting indentured servitude would be repealed b. gain, restrictions on western settlement would be removed c. lose, the right to serve in the British army or navy would be lost d. lose, the poor laws, which provided a limited safety net, would no longer apply in an independent United States.

b. gain, restrictions on western settlement would be removed

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 c. ending the gold standard would lead to chronic deflation d. ending war contracts would lead to mass unemployment

b. heavy reparations imposed on Germany would produce bitterness in Germany

When economic historian Albert Fishlow examined the profits of the of the Midwestern railroads built before the Civil War he found that profits were ____ when the railroad opened for business and that the profits then ____ over time. a. high, rose b. high, fell c. low, rose d. low, fell

b. high, fell

In a nutshell, the "transfer problem" created by German Repatriations after World War I was how could Germany a. pay in gold, if she wasn't on the gold standard b. increase her exports and decrease her imports c. ship goods to other countries given the destruction of her rail network and her merchant marine d. set up productive factories in countries that lacked her highly educated labor force

b. increase her exports and decrease her imports

Close to 120,000 American military personnel died in World War I, about half in battle or from wounds suffered in battle, and about one half from disease, mainly ________ which became a disastrous worldwide pandemic. a. yellow fever b. influenza c. malaria d. tuberculosis

b. influenza

What means of finance supplied the largest fraction of total federal spending during World War I?

borrowing Taxation was important, but borrowing was far more important, accounting for 61 percent of total financing.

In Enterprise Alabama there is a statue of the ________ because _______. a. Yankee carpetbagger, Yankee school teachers improved the educational system b. Yankee carpetbagger, Yankee storeowners broke the monopoly of the local storeowner c. boll weevil, it forced farmers to adopt new crops d. boll weevil, it forced the government to provide agricultural price supports

c. boll weevil, it forced farmers to adopt new crops

One major cost of the classical gold standard compared with modern monetary systems was that _____. a. exchange rates were uncertain under the gold standard b. long-term inflation was higher under the gold standard c. central banks might not have enough gold to alleviate a panic d. international capital flows were discouraged by the gold standard

c. central banks might not have enough gold to alleviate a panic

Under the agricultural system that prevailed in the South after the Civil War the sharecropper often made use of the crop lien law. This law allowed sharecropper to _________. a. file for bankruptcy provided he had permission of the landlord b. receive debt relief provided he remained an agricultural worker and c. contract a debt by pledging part of a future crop d. contract a debt by pledging his future labor

c. contract a debt by pledging part of a future crop

After the Civil War the southern sharecropper was often tied to the land by an economic system similar in some ways to slavery although less onerous than slavery, and known to economic historians as ______. a. lien slavery b. the Sea Islands system c. debt peonage d. the labor redundancy system

c. debt peonage

During the eighteenth century Britain passed the Iron Act which _______. This law was passed at a time when England was switching ____. a. encouraged the colonists to manufacture iron for export, from charcoal-based iron production to coal- based iron production b. prohibited the colonists from manufacturing iron for export, from coal-based iron production to charcoal- based iron production c. encouraged the colonists to manufacture iron for export, from coalbased iron production to charcoal- based iron production d. prohibited the colonists from manufacturing iron for export, from charcoal-base iron production to coal- based iron production

c. encouraged the colonists to manufacture iron for export, from coalbased iron production to charcoal- based iron production

The firebombing of Hamburg was considered a ____ by the Strategic Bombing Survey because _____. a. success, German oil supplies were destroyed b. success, thousands of potential German workers were killed c. failure, German munitions production increased after a short pause d. failure, loss of aircraft was high, and the damage caused by the fire was easily repaired

c. failure, German munitions production increased after a short pause

During the Populist era many farmers moved into Kansas and only to go bankrupt a few years later. In class I argued that one major cause of these failures was that _____. a. farmers had despoiled the environment b. slow growth of the money supply had worsened the farmer's terms of trade c. farmers had overestimated the average annual rainfall d. New York bankers decided to raise interest rates in order to pull capital into the growing stock and bond markets

c. farmers had overestimated the average annual rainfall

In class I traced the hunger experienced in central Europe during World War I to a shortage of, first of all, ____ a. farm labor b. petroleum c. fertilizer d. draft animals

c. fertilizer

The problem with the "General Maximum Price Regulation" of World War II was .... a. the government kept changing its mind about which prices to control b. demand shifted from the controlled to the uncontrolled sector c. firms were given too much discretion in setting prices d. it was not legally enforceable, but rather relied on appeals to patriotism

c. firms were given too much discretion in setting prices

During the "Hold the Line" period in World War II, the U.S. used "dollar and cents" pricing. This term meant _____. a. controlling strategic prices b. freezing prices as of a certain date in 1942. c. having the Office of Price Administration figure out an exact price for every commodity. d. controlling only wages on the theory that the prices of most commodities are based on the labor cost of producing them.

c. having the Office of Price Administration figure out an exact price for every commodity.

According to Robert W. Fogel, if the railroad had not been invented there would have been many more great canal songs such as "I've Been Working on the Erie." Therefore, according to Fogel, a complete measure of the benefits of the Railroads would ___. (We can regard the "consumer surplus" generated by a product as the contribution of that product to total welfare.) a. include the consumer surplus produced by "I've Been Working on the Railroad," but not include the consumer surplus potentially produced by "I've Been Working on the Erie." b. include the consumer surplus produced by "I've Been Working on the Railroad" and by "I've Been Working on the Erie." c. include the difference between the consumer surpluses produced by "I've been working on the railroad" and "I've Been Working on the Erie" d. include the consumer surplus produced by "I've Been Working on the Erie" but not the consumer surplus generated by "I've Been Working on the Railroad."

c. include the difference between the consumer surpluses produced by "I've been working on the railroad" and "I've Been Working on the Erie"

Economic Historian Robert Higgs maintains that World War II was not a period of true prosperity even though unemployment was low and real GDP was high because (among other things) ____. a. people were not free to move from one job to another b. government control of the media limited freedom of expression c. inflation was underestimated d. the distribution of income was more unequal because of profiteering

c. inflation was underestimated

The most serious economic problem during the administration of President Jimmy Carter, according to the class lecture, was ______ which fell especially hard on _______ among others. a. a rising dollar, the elderly living on fixed incomes b. falling productivity, wealthy investors c. inflation, the elderly living on fixed incomes d. high unemployment, the young and low skilled

c. inflation, the elderly living on fixed incomes

According to "Bagheot's rule" the best way to respond to a panic is for the central bank to a. let each financial intermediary fend for itself b. lend freely to financial intermediaries at low interest rates c. lend freely to financial intermediaries at high interest rates d. lend money so the stock of money grows at a slow and stable rate

c. lend freely to financial intermediaries at high interest rates

One problem generated by price controls in World War II was forced up-trading. In this context what is the best example of forced uptrading? a. Filler is added to candy bars b. illegal butcher shops are set up where one can buy steaks at more than the official price c. low-price-low-quality clothing disappears d. weekend sales of furniture are discontinued

c. low-price-low-quality clothing disappears

After the Civil War labor-hours per capita in the South was ____ than it had been before the Civil War, and physical crop output per capita was _____ than it had been before the Civil War. a. lower, higher b. higher, lower c. lower, lower d. higher, higher

c. lower, lower

According to the class lecture and the text, one of the ultimate goals of the British mercantilists was a. redistributing income from rich to poor b. redistributing income from the aristocracy to the bourgeoisie (middle class). c. maximizing the military power of England d. protecting the dominant role of agriculture in the British economy..

c. maximizing the military power of England

In the 1820s the China ran a large balance of payments surplus, and Americans had to ship silver to China to buy Chinese goods. But this became unnecessary after China began importing large amounts of ___. a. wheat b. salt pork c. opium d. weapons

c. opium

During WWII meat-easy were set up. These were _____. a. places where the poor could legally purchase lower quality cuts of meat b. places where meat could be purchased illegally at prices below the official prices set by the Office of Price Administration c. places where meat could be purchased illegally at prices above the official prices set by OPA d. places where off-duty soldiers and sailors could go for food and entertainment

c. places where meat could be purchased illegally at prices above the official prices set by OPA

The problem with the General Maximum Price Regulation of World War II was ___ . a. demand shifted from controlled to uncontrolled prices b. specific dollar and cents prices were mandated by the government c. prices were set with reference to base period prices identified by the firm d. it was not legally enforceable, but rather relied on appeals to patriotism

c. prices were set with reference to base period prices identified by the firm

The Free banking laws of the 1850s have been criticized for ____. a. creating an incentive for prospective bankers to bribe state legislators for their "free" licenses b. increasing the growth rate of the economy at the cost of tilting the distribution of income toward the rich. c. producing wildcat banking in which bankers tried to hide from their note holders d. slowing the growth rate of financial intermediation

c. producing wildcat banking in which bankers tried to hide from their note holders

According to the class lecture, the system used during the Revolution of allowing conscripts to hire substitutes _____ when compared with a draft in which men are chosen through a lottery, and must serve if drafted. a. was regressive because it transferred income from the poor to the rich b. economically inefficient since the army did not get the best soldiers c. pushed up the total income of soldiers toward the wage at which they would serve voluntarily d. increased the costs to the treasury of raising an army

c. pushed up the total income of soldiers toward the wage at which they would serve voluntarily

In class I showed that the farmer's "terms of trade" worsened between 1870 and 1895. Of the following which explanation of this phenomenon is most consistent with the class and text discussions? a. adherence to the gold standard produced deflation b. adherence to bimetallism standard produced deflation c. rising world supplies of agricultural products reduced the real priceof agricultural products d. rising storage and transport costs reduced the farmer's net income.

c. rising world supplies of agricultural products reduced the real priceof agricultural products

During World War II Federal deficits ____ the 1929 level, while the money supply ____ the 1929 level. a. rose rapidly above, did not rise above b. remained below, rose rapidly above c. rose rapidly above, rose rapidly above d. remained below, remained below

c. rose rapidly above, rose rapidly above

According to the "real bills doctrine" the ideal bank loan is _____ and secured by ______. a. short-term, widely marketed stocks and bonds b. long-term, physical commodities such as agricultural products c. short-term, physical commodities such as agricultural products d. long-term, widely marketed stocks and bonds

c. short-term, physical commodities such as agricultural products

The National Industrial Recovery Act a. lasted until World War II, and was a major determinant of wages and prices throughout the 1930s b. lasted until World War II, but became a dead letter because of inadequate enforcement c. was abandoned when it was clear that the program was counterproductive d. was abandoned when the law was declared unconstitutional in the famous "sick chicken case"

d. was abandoned when the law was declared unconstitutional in the famous "sick chicken case"

An attempt to resurrect the "gang system" of agriculture as a wage system after the Civil War ____. a. was never made because of opposition from the Freedmen's bureau b. was made but failed because the price of cotton was unusually low, due to the release of cotton embargoed during the Civil War c. was made but failed because the price of cotton was unusually low due to the new sources of supply developed in Egypt and India during the Civil War d. was made but failed because the Freedmen refused to work under the "gang system" except at wages that most landowners could not afford to pay

d. was made but failed because the Freedmen refused to work under the "gang system" except at wages that most landowners could not afford to pay

What happened to real earnings of workers in the United States between 1914 and 1920?

money incomes were up 14.5 percent over 1916, but consumer prices were up 16.1 percent—real wages had fallen. The situation was reminiscent of the Civil War. In the long run, we expect real wages to be determined by the productivity of labor, but in the short run, some wages may prove to be sticky and inflation or deflation can alter the real wage.

"40 acres and a _____."

mule

Economic causes of WWII

Treaty of Versailles - Germany must admit guilt - Germany must pay reparations 2. Germany's search for "Lebensraum" 3. Japan and Germany's struggles for first power status through "autarky"

How did economists of Wilson's era believe we should finance the war?

- 100% taxes (intergenerational equity) - 0% borrowing - 0% printing money

How did JP Morgan believe we should finance the war?

- 25% taxes - 75% borrowing - 0% printing money

How did William Gibbs Mcadoo (Secretary of the Treasury)

- 50% taxes - 50% borrowing (high taxes could undermine support for the war).

How did John Stuart Mill believe we should finance the war?

- Mostly taxes - Some borrowing (as long as interest rates don't increase) - 0% printing money

How did Robert Barro (at Harvard) believe we should finance the war?

- Small increase in taxes - Mostly borrowing (to smooth tax increases) - 0% printing money

How did Adam Smith believe we should finance the war?

100% taxes - 0% borrowing - 0% printing money

The 3 ways of financing wartime spending are

1. Taxes 2. Borrowing from the public by issuing bonds 3. Printing money

Period of U.S. neutrality in WWI

1. starts with financial crisis - Stock market closed - Emergency currency issued 2. Turns into prosperity

Which amendment starts and repels prohibition?

18th Amendment - 1919 - starts prohibition 21st Amendment - 1933 - repeals prohibition

What were the critiques of WWI?

A critique of the Treaty. It was unfair to Germany and would produce political demoralization and unrest in Germany. Germany must pay $56 billion in gold. A lot of money. Perhaps the whole GDP of Germany for 3 years.

Mercantilism was the economic doctrine that guided British policy toward North America during the colonial era. Briefly answer the following two questions in 25 words or less. (1) What did the Mercantilists believe constituted a favorable balance of trade? (2) What goods did the Mercantilists believe should be produced in the American colonies and what goods in Britain.

A favorable balance of trade is exports exceeding imports. England should produce manufactured products and the colonies raw materials.

It' a rich man's war and _____.

A poor man's fight. (or poor man's war, battle, etc.)

Alexander Hamilton Asked Congress to pay interest and principal on debts incurred by the Continental Congress during the Revolution____. A. and to pay principal and Interest on all debts incurred by the state governments during the Revolutionary War B. But to pay Foreigners in Continental dollars rather than gold or silver C. But to pay speculators who had bought debts issued to Revolutionary War soldiers only what they had actually paid for those debts and to pay the rest to veterans D. But to scale back the debts to 50 percent of their face value because of inflation.

A. and to pay principal and Interest on all debts incurred by the state governments during the Revolutionary War

What was the Employment Act of 1946? What Federal Agency was created by this Act?

According to the act, the federal government's responsibility was to"promote maximum employment, production and purchasing power."The adjective maximum was purposely ambiguous, but the entire statement was generally understood to mean that the government would act quickly to shore up the economy if a severe recession threatened.

This president set out and succeeded in destroying the Second Bank of the United States

Andrew Jackson

Why and when did America enter WWI

April 1917 • Why? German submarine warfare was Inhumane and Violates American rights - Solidarity with England and France - Other Issues - The Zimmerman note, etc.

Who was Henry J. Kaiser? What did he do during World War II?

At Henry Kaiser's shipyards in Portland, Oregon, where some of the most innovative techniques were used, one of the famous Liberty ships was produced, it has been claimed, in a record eight days. To some extent, as Henry A. Gemery and Jan S. Hogendorn (1993) have shown, mass-production techniques were used even in producing destroyers.

A sign (possibly) of a bubble in the stock market would be a ____ that was ____ the rate of return on government bonds. a. dividend/earnings ratio (dividends divided by earnings), less than b. dividend/price ratio, less than c. dividend/earnings ratio, more than d. dividend/price ratio, more than

B. dividend/price ratio, less than

In the year 1941 how did Germany rank in munitions production compared with the United States and the Soviet Union (U.S.S.R.).

By 1939, Germany and Japan had accumulated considerable stocks of munitions. They hoped to win against countries with greater long-term economic capacities by employing these munitions in blitzkrieg attacks before their opponents had time to arm. Although they won numerous initial battles, eventually their attacks were blunted, and the war became a war of attrition. The United States launched a huge program to build both arms and the means of producing them, and its production surged. By 1942, U.S. munitions production exceeded that of Germany and Japan combined. Despite the ability of Germany and Japan to increase their production in the face of heavy air attacks (see Economic Insight 25.2 for a discussion of strategic bombing), and despite the advantage of fighting behind defensive lines, the final outcome was no longer in doubt. The enormous weight of the combined munitions production of the United States and her allies and the huge advantage of the allies in personnel meant that Germany and Japan would be defeated sooner or later.

belief in a new age

Belief in a "New Age" also pushed the stock market up • Rapid economic growth in the future • Poverty will be eliminated • Prohibition - Irving Fisher • Technological progress -Thomas Edison, Guglielmo Marconi, Henry Ford - Industrial laboratories; Edison, Dupont

How does Ben Bernanke, formerly the head of the Federal Reserve, explain the persistence of the Great Depression?

Bernanke's interpretation stressed the problem of"asymmetric information."When a borrower and lender negotiate, their access to key information differs. The lender cannot see into the mind of the borrower to learn the borrower's determination to repay. Normally, this problem can be overcome by forging long-term relationships between borrowers and lenders or through the use of collateral. When a bank failed, however, the long-term relationships between the bank and its borrowers was severed. A borrower could approach another lender, but how would another lender know that in the past the borrower had struggled to faithfully repay loans or that the borrower was regarded by other members of the community as a good risk?

There is a picture in the text in chapter 21 of a guy wearing a straw hat. Who is he and why is he important?

Bernard Mannes Baruch, a successful Wall Street investorand speculator and strong supporter of the Democratic Party, Wilson named him to head the War Industries Board in 1918.

"Once I built a railroad, I made it run, Made it race against time. Once I built a railroad, now it's done -- Brother, can you _______?"

Brother, can you spare a dime

what caused the market to rise so much?

Buying on Margin Belief in a "New Age"

In 1896 William Jennings Bryan declared that "Thou Shalt Not Crucify Mankind Upon a Cross of Gold" at the Democratic National Convention. How did Bryan propose to rectify the problem?

By Replacing the gold standard with a bimetallic standard. Or adding silver to the money supply

Milton Friedman and Anna J. Schwartz claim that the main cause of the Great Depression was the decline in ______. a. bank deposits caused by the bank failures b. investment spending by large corporations caused by the stock market crash c. exports caused by the Smoot Hawley tariff d. consumer durable purchases caused by the stock market crash

a. bank deposits caused by the bank failures

Typically, economic historians see a sharp contrast between Alexander Hamilton who favored the United States becoming a great ____ nation with a _____ central government and Thomas Jefferson who favored the United States becoming a great _______ nation with a ____ central government. A. Industrial, weak; agricultural, strong B. agricultural, strong; industrial, weak C. Industrial, strong; agricultural, weak D. agricultural, weak; industrial, strong

C. Industrial, strong; agricultural, weak

Folksong about post-civil-war poverty in the South: "Seven cent cotton and forty cent meat. How in the world _____."

Can a poor man eat

A house divided against itself _____. Abraham Lincoln.

Cannot stand (or cannot exist half slave and half free)

Who was Charles Ponzi?

Charles Ponzi, an Italian immigrant with a checkered past, started a fraudulent investment plan that would add a new term to the language: the Ponzi Scheme. Ponzi promised his investors high rates of return, 50 percent in 45 days. He had a story to back up his claim: He would invest in a special kind of international postage stamp. It could be bought in Italy for lira and sold in the United States for dollars. Because the official prices of the stamp had not been adjusted to match wartime changes in exchange rates, it was possible to buy the stamps cheaply in Italy and sell them for a profit in the United States.

This city became "Hog Butcher for the World."

Chicago

What were ways of getting fighting resources in WWI

Conscription - Fighters - resources • Conquest • Purchase - Taxes - Borrowing - Printing Money

Which of the following was not part of the "Federalist Financial Revolution orchestrated by Alexander Hamilton? A. Consolidate and pay all revolutionary war debts B. Establish a National Bank C. Impose a tariff on imports D. Establish a system of land grant colleges

D. Establish a system of land grant colleges

Congressman and folk hero who favored cheap land for settlers in the American West and died at the Alamo.

Davy Crockett

Franklin Roosevelt: fireside chat in December 1940 • We must be the Great Arsenal of _____.

Democracy

Woodrow Wilson (President during the war): "The World Must be Made Safe for ________"

Democracy

Who was Dr. Francis E. Townsend?

Dr. Francis E. Townsend, a California physician, attracted a considerable support for his plan to give everyone over the age of 60 a federal pension of $150 per month ($5,000 in today's money). Sung Won Kang (2006) showed that Social Security was influenced by the Townsend movement: Members of Congress who voted against the Townsend plan then voted for the liberalization of Social Security to remain in good standing with constituents who supported the plan.

Who was Mary Bailey? What did she do in the Depression?

Mary Bailey (Donna Reed) turns over the money she has saved for a second honeymoon to George Bailey (Jimmy Stewart), so he can end the run on his savings bank. The Federal Reserve should have handled the crisis the way Mary did.

Go West _____.

Go west young man, (or go west young man and grow up with the country)

The inflation in the South during the Civil War was caused by

Government Issued paper

The inflation during the Revolutionary War was caused by

Government issued paper

The inflation in the North during the Civil War was caused by

Government issued paper

Who was Harry Hopkins? What was his philosophy of government aid for the unemployed?

Harry Hopkins, a social worker and administrator from New York; already a friend of Roosevelt, under Hopkins's direction. This agency employed millions of people in road building, flood control projects, and similar programs. Its most famous and controversial projects employed writers, photographers, and other creative artists. Critics complained, with some justice, that these projects. Under Hopkins's direction, the main emphasis of the Works Projects Administration was creating employment; the contribution of these projects to the infrastructure of the economy was secondary.

What percentage of American families had inside flush toilets in 1920? What percentage in 1930? What is the point?

In 1920 = 20% in 1930 = 51% In the 1920s, the modern American standard of living became available to a broad segment of the middle class. Mass production, mass marketing, and spectacular advances in the production of consumer durables, electric power, new appliances, suburban housing, and city skyscrapers highlighted the decade.

When there dreams of a new life on the frontier turned to dust, pioneer farmers wrote this slogan on their "prairie schooners": "In God we Trusted ____."

In Kansas, we busted

Capitalizing Patriotism

McAdoo launched an aggressive program to market bonds in World War I, to"capitalize patriotism"(Kennedy 1980, 105). Huge bond rallies were held, and the crowds were exhorted to buy war bonds by celebrities such as Mary Pickford and Douglas Fairbanks. Charlie Chaplin made a film showing how the purchase of war bonds helped finance the war. How much all of this helped is open to question. Despite all the hoopla and the considerable, often vicious anti-German propaganda, the government found that it could not sell bonds that paid much below the going market rate.

Wheatless Wednesdays _____ Mondays

Meatless Mondays

Fisher Effect equation

Interest rate = real interest rate + inflation

According to economic historian Claudia Goldin what percentage of women who entered the labor force between 1940 and 1944 had dropped out by 1950? What is the meaning of this finding?

Investigating a sample of women workers over the war decade, Goldin found that more than half of the Rosies who had entered the paid labor force between 1940 and 1944 (the peak year) had dropped out by 1950. Many lost their jobs as a result of seniority rules and social pressures that favored returning servicemen. Others chose to leave because economic circumstances permitted them to do so.

When asked what the stock market will do J.P. Morgan is reputed to have said _____.

It Will Fluctuate

This financier is credited with helping to market federal government bonds during the Civil War and with strengthening the long-term market for financial securities

Jay Cooke

The history of racial segregation in the United States can be described as: "The Strange Career of _____."

Jim Crow

When the British captain asked this American if he wished to surrender, he replied "I have not yet begun to fight."

John Paul Jones

Cotton is _____,

King

Bank Holiday

Long period between Presidential election (Roosevelt beats Hoover) and President starts working. • State bank holidays • Roosevelt declares a national bank holiday • Banks are inspected • Deposit insurance announced • End of banking panic

Merchants of Death

Merchants of death was an epithet used in the U.S. in the 1930s to attack industries and banks that supplied and funded World War I (then called the Great War). The term originated as the title of a book by H. C. Engelbrecht and F. C. Hanighen, Merchants of Death (1934), an exposé. The term was popular in antiwar circles of both the left and the right, and was used extensively regarding the Senate hearings in 1936 by the Nye Committee

What did Milton Friedman and Anna J. Schwartz consider the most important reform of the financial system instituted during the 1930s?

Milton Friedman and Anna J. Schwartz argued that"Federal insurance of bank deposits was the most important structural change in the banking system to result from the 1933 panic, and, indeed, in our view, the structural change most conducive to monetary stability since state bank note issues were taxed out of existence immediately after the Civil War"(1963, 434). A major part of their evidence (see Economic Reasoning Proposition 5, evidence matters) was the tremendous fall in the annual number of bank failures and losses borne by depositors after deposit insurance was introduced.

Guns Vs. Butter

Nazi Minister of Propaganda Joseph Goebbels: "We can do without butter, but, despite all our love of peace, not without arms. One cannot shoot with butter, but with guns." Nazi Air Minister Hermann Goring: "Guns will make us powerful; butter will only make us fat."

Here is the agricultural ladder in the South after the Civil War. Fill it in from top to bottom. Use the following categories: Sharecropper, owner, laborer cash renter,

Owner Cash renter Sharecropper laborer

Consider the following chart which shows real percapita incomes in 1800, shortly after the American Revolution. Which countries are represented by the two highest bars?

Netherlands, United Kingdom

Did the stock market crash effect Canada?

No banking panics in Canada - Nationwide branch banking with diversified portfolios— can absorb losses more easily

Warren G. Harding (President afterwards): "America's present need is not heroics, but healing; not nostrums, but ________."

Normalcy

Economist Joseph Schumpeter was a major critic of the New Deal. What was his complaint with the New Deal?

One factor, stressed by some economists at the time, including Joseph Schumpeter in particular and more recently Robert Higgs, was that the level of private investment spending remained depressed They blame the political climate created by the New Deal for discouraging investment. Social Security and the new freedom granted to labor came in for some harsh words from the business community.

Did Prohibition reduce consumption of alcohol?

Possibly not: • There was a large black market • People tended to consume more concentrated forms of alcohol. • There was a "forbidden fruit" effect

Charles Ponzi

Promised to pay high dividends based on a postage stamp trading scheme. Investors flock to Ponzi Pay's dividends out of new investments When he runs short of new investors, he can't pay dividends and scheme collapses Boston 1920

The Three R's

Relief - providing for the unemployed Recovery - Getting back to full employment Reform - Preventing a recurrence

To what factors do Goldin and Katz attribute "the High School Movement?"

Research by Claudia Goldin and Lawrence Katz has clarified the underlying forces. First, the rate of return from going to high school was extremely high (the extra income earned after graduation compared with the earnings forgone). In addition, communities were willing to build and staff high schools so that the children and grandchildren of the people living there would have more economic and social opportunities. The kinds of communities that had the most social cohesion, and therefore were most likely to vote for high taxes to finance high schools, were not located in the big cities with their diverse immigrant populations. Instead, it was the farming communities of the Midwest—in Iowa and Nebraska, for example—that led the way in establishing high schools.

According to historian Richard Overy what contribution did Allied bombing make to the ultimate victory of the Allies over the Axis?

Richard Overy is one of the leading voices on the other side. In Why the AlliesWon (1995), he argues that strategic bombing was important from a military perspective because it opened a second front against Germany. One-third of German artillery production went for antiaircraft protection, and most of the planes produced in Germany went up to fight the British and American bombers. This diversion of resources eased the burden of the Soviets fighting Germany on the Eastern Front.

Who was Samuel Gompers? What did he do during the war?

Samuel Gompers, the president of the American Federation of Labor, had served on Wilson's Council of National Defense during the war and had attended the negotiations over the Treaty of Versailles where he helped to organize the International Labour Organization.

What is a call loan? What conclusion about the call loan market did Eugene White draw from the movement of call loan rates in the late 1920s?

Some historians have thought that an increased willingness on the part of the New York banks to supply call loans caused the bull market (Galbraith 1961, 37). Eugene White's (1989) study of the market shows, however, that this was not the decisive factor. Credit, to put it somewhat differently, was being pulled into the stock market by the rising interest rate on call loans.

What lesson about the appropriate role of government in the economy did prominent war leaders such as Bernard Baruch draw from the American experience in World War I?

Some people, however, including prominent war leaders, Bernard Baruch in particular, concluded that the economy would work better if the government played a larger role in coordinating economic activity than it had before the war. In retrospect, we can see that American involvement in the war was too brief to allow strong conclusions about the long-term effects of government interventions. But the glow of success that surrounded wartime government programs made them powerful examples in the debate over the appropriate role of government in the economy. The idea that an activist government could improve the functioning of the economy lay dormant during the prosperous twenties but would become important as the Great Depression took shape.

What was the most important means of finance for the United States in WWII?

Tax revenues: As a result of these tax increases and the rapid increase in the tax base, the United States was able to finance about 40 percent of the war with taxes. This was a larger share of total spending on the war than had been financed by taxes in the Civil War or World War I.

Economic historian Martha Olney drew attention to _____ to help explain the rise in the purchase of consumer durables in the 1920s

Thanks to the work of Martha Olney (1991), we now know that important developments also occurred on the demand side. One was the development of consumer credit—"buy now, pay later."Rather than saving up cash or interest-earning assets to buy a consumer durable, a consumer could make a down payment, take immediate possession of the durable, and pay for it on the installment plan. The finance company that made the loan was protected because it had a claim on the durable and could repossess it if the buyer failed to make the requisite payments.

Did the Fed follow Bagehot's rule during the Great Depression?

The Fed Knew Bagehot but didn't follow his policy "pursuit of the policies outlined by the System itself in the 1920's, or for that matter by Bagehot in 1873, would have prevented the catastrophe."

Does the Fed help out during the banking panics of the Great Depression?

The Federal Reserve does NOT intervene to halt the crisis.

Florida Land Boom

The Florida Land Boom __ Rapid increase in land prices especially in Miami __ Prices Crash in 1925 __ did not cause macro-economic contraction

In 1896 William Jennings Bryan declared that "Thou Shalt Not Crucify Mankind Upon a Cross of Gold" at the Democratic National Convention. What was Bryan referring to as a "Cross of Gold"?

The Gold Standard

In 1896 William Jennings Bryan declared that "Thou Shalt Not Crucify Mankind Upon a Cross of Gold" at the Democratic National Convention. Who was "Thou"? In other words Who was Bryan criticizing?

The Republican Party

What was the Smoot-Hawley tariff? Does the text regard it as a major cause of the Depression?

The Smoot-Hawley tariff has often been listed as a major cause of the Great Depression. The tariff was passed in June 1930. It raised tariffs on a wide array of goods, especially agricultural products. Scholars for the most part now agree, however, that the tariff, although unwise, was a minor factor. Trade, for one thing, was less important to the economy than it is now.Exports were only 6 percent of gross national product in 1930, and imports only 4.9 percent. Many goods, moreover, were exempted from higher tariffs. The increased tariffs did have some positive employment benefits in import-competing sectors. So at most, Smoot-Hawley made a bad situation slightly worse.

Folksong about a transcontinental railroad: "She is as graceful as a comet, and swift as a waterfall, She is the Western Combination, _____."

The Wabash Cannonball

In class I interpreted the Wizard of Oz as a monetary allegory. According to this interpretation the ability of silver money to make things better is represented by a. Dorothy's magic silver shoes b. The Wizard's silver balloon c. The Tin Man's silver axe d. The Good Witch's magic silver wand f. Econometrics is a more important course than economic history because in econometrics they don't talk about old movies that no one watches anymore.

a. Dorothy's magic silver shoes

When pioneers thought that western land was too dry to grow crops on they were told that "rain follows ____."

the plow

Consider the following lyric from one of the hit songs of the Great Depression. "Once I built a railroad, I made it run, Made it race against time. Once I built a railroad, now it's done -- Brother, can you spare a dime?" Basically, the lyricist is coming closest to the explanation of the Depression provided by _____? a. John Maynard Keynes b. Milton Friedman c. Ben Bernanke d. Joseph Schumpeter

a. John Maynard Keynes

What happened to federal spending as a percentage of Government between 1916 and 1918?

The financial reflection of the military effort was a tremendous increase in spending by the federal government, from 1.5 percent of GNP in 1916 to 24.2 percent in 1918.

How would you describe how America mobilized in WWII in terms of the production possibilities curve?

The production possibilities curve shows the trade-off between guns (military spending), measured on the vertical axis, and butter (civilian spending), measured on the horizontal axis. The figure shows the actual combinations of guns and butter produced annually during the war years and a hypothetical curve drawn through the combinations achieved in 1944 and 1948. This line shows the trade-off between guns and butter when the economy was at full employment. But the combinations for 1939, 1940, 1941, 1942, and 1943 lie inside the production possibilities curve. This shows that the economy was still operating below its maximum possible output when it entered the war. Thus, in general, the United States increased its war output mainly by moving vertically toward the production possibilities curve rather than moving along it. When the war ended the United States moved along the production possibilities curve, increasing production of butter by reducing production of guns.

What was the Marx brothers' movie Cocoanuts about?

The real estate boom reached its most outlandish form, however, in Florida. Prices for building sites rose rapidly, and hucksters of all types descended on Florida to make their fortunes buying and selling land. It was claimed, for example, that a property in Palm Beach, Florida, that sold for $800,000 in 1923 was broken into lots that were resold for $1.5 million, and that by 1925 the land was worth $4 million. The speculative frenzy was lampooned by the Marx brothers in the movie Cocoanuts (1929).

How does the text explain the decline in labor union membership between 1920 and 1923?

The sharp recession of 1920-1921, and the resulting high unemployment, undermined support for unions. It is pertinent to note in Table 22.2 that most of the membership decline had occurred by 1923, after which time there was only minor attrition. In addition, beginning with the important strike against U.S. Steel in 1916, a host of strikes failed—except to anger employers.

• Real Rate = 4.00% (on corporate bonds) - - 10% deflation = 14.00%

This is important and I don't know why.

The Austrian School blames the Great Depression on "distortions" that built up in the 1920s. What were those distortions and what caused them.

This school emphasizes the distortions that built up in the economy in the 1920s, in particular the stock market and real estate booms that we discussed in chapter 22. In their view, the Federal Reserve must shoulder much of the blame for the distortions that developed in the 1920s because of the easy money that it followed. This was clearly an inflationary policy, but one that didn't show up in commodity prices, but rather showed up in the prices of assets such as stocks and real estate. In the Austrian view, once the economy had become distorted, a major correction in the form of a depression was inevitable. New Deal policies that interfered with the adjustment of prices and reallocation of resources, moreover, only served to slow the recovery.

This major political figure from the early republic is most responsible for the Northwest Ordinance (land ordinance of 1787)? (Reading Question)

Thomas Jefferson

What did the economist Irving Fisher say about the stock market in 1929? What did he say about the song "Yes, we have no bananas"?

When journalists wanted to know whether the popular song title"Yes, We Have No Bananas"was good English, they asked Irving Fisher. (The answer, according to Fisher, was yes, if the question was "Have you no bananas?") Fisher was not shy in making predictions about the stock market. Just weeks before the crash, he argued that"stock prices have reached what looks like a permanently high plateau,"adding that"there might be a recession in stock prices, but not anything in the nature of a crash."Even after the crash, Fisher wrote that for "the immediate future, at least, the outlook is bright"

Cost of the War

What should be included? 1. Cost of munitions 2. Wages (at market price) 3. Loans to foreign governments (if they are not going to be paid) 4. Veterans benefits 1. medical? 2. conflict related medical? Cost of WWI = $31.0 billion Cost of the War/GDP = 31/76.63 = 40.5%

Why was there a shortage of meat in 1946?

When legislation authorizing price controls expired in June 1946, Congress passed a new law. It was so riddled with loopholes that President Truman vetoed it in the hope that a strong dose of inflation would force Congress to pass a stiffer measure. Eventually, legislation was passed that permitted the re-control of selected prices. When meat prices were re-controlled, ranchers withheld their animals from the market—after all, it was clear that price controls were on the way out and that prices could only go higher—and the result was a meat shortage. Faced with outraged consumers on one hand and recommendations that he nationalize the nation's cattle herds on the other, Truman decided to terminate price controls for good.

What did Coxey's army demand? (Lecture and reading question) a. a federal road building program financed by printing money b. return to the pre-Civil War price of gold c. an end to the "workhouse" d. unemployment compensation for any man who was able and willing to work

a. a federal road building program financed by printing money

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 f. Not this again

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

In World War I the War Industries Board was headed by _____. a. Bernard Baruch b. Woodrow Wilson c. Herbert Hoover d. Harry S Truman

a. Bernard Baruch

According to the class lecture James Buchanan Duke's decision to advertise his brands of cigarettes nationally arose from ____ a. the technology of cigarette making, which required mass production to reach lowest costs of production b. a new antitrust philosophy that protected monopolies as long as they didn't over-charge for their products: as long as they were good monopolies c. a mistaken belief that he could sell crummy cigarettes as long as he advertised them heavily d. a new technology (radio) that lowered the cost of national advertising

a. the technology of cigarette making, which required mass production to reach lowest costs of production

One advantage of the cash subsidies to the RRs compared with land grants (as revealed in the history of the transcontinental RRs) was that _____. a. the value of the cash subsidies was easier to measure b. the cash subsidies gave the railroad builders an incentive to build durable roads c. the cash subsidies encouraged railroads to build use better materials (steel instead of iron). d. there were no advantages

a. the value of the cash subsidies was easier to measure

The "safety valve" theory, as applied in nineteenth century America, refers to the idea that _____. a. there was less labor unrest in America compared with Europe because abundant western land created economic opportunities for unemployed factory workers to move west b. farm incomes in the Midwest were relatively high compared with Europe because less productive farmers were constantly being drawn to the new cities developing in the Midwest c. frontier violence was the natural outcome of the isolated lives lived by the pioneers who lacked the safety valve for emotional release provided by urban areas d. early steam engines exploded because they did not include an emergency vent for steam.

a. there was less labor unrest in America compared with Europe because abundant western land created economic opportunities for unemployed factory workers to move west

During the famous "Bank Holidays" of the 1930s ___. a. Bank workers went on illegal strikes to protest the intensity of work caused by the crisis, and to further the long run goals of their leftist unions b. Bank deposits were restricted, allowing depositors to withdraw only a bit at a time c. Businesses and government bureaus closed so that people could get their money out of the banks d. banks were relieved from taxes and reserve requirements

b. Bank deposits were restricted, allowing depositors to withdraw only a bit at a time

What, according to President Wilson, was the main factor leading to his decision to take the United States into World War I? a. Britain's decision to use its surface fleet to blockade and starve Germany b. Germany's decision to use its submarine fleet to blockade and starve Britain c. Wall Street's fear that its holdings of British bonds would become worthless if Britain lost the war d. Wall Street's fear that deposits held by American banks in German and Austrian banks would become worthless if Germany lost the war.

b. Germany's decision to use its submarine fleet to blockade and starve Britain

The chief administrator of the Food Administration in World War I was ___. a. Theodore Roosevelt b. Herbert Hoover c. Franklin Roosevelt d. Harry Truman

b. Herbert Hoover

Which of the following statements is not true about U.S. economic development, according to the first class lecture? a. The United States has grown more rapidly in terms of population and in terms of total real GDP than most other industrial nations over the last 200 years. b. The United States has grown more rapidly in terms of real per capita income than most other industrial nations in the last 200 years. c. Per capita real income was on a par with many countries in Continental Europe at the end of the eighteenth century. d. Growth in the United States has frequently been interrupted by financial crises

b. The United States has grown more rapidly in terms of real per capita income than most other industrial nations in the last 200 years.

In what sense was banking free under the "free banking laws" passed in various states after the Second Bank of the United States was closed? a. the legislature was free to issue or refuse to issue bank charters b. any person was free to start banks wherever they wanted c. the banks were free to deny payment of silver for notes, if unreasonable demands were being made d. banks were free to invest the funds raised by issuing notes in any asset they chose

b. any person was free to start banks wherever they wanted

Economic Historian Albert Fishlow found that the Midwestern railroads were completed ______ demand from farmers. a. years ahead of b. at about the same time as c. years after d. ahead of demand from farmers in some areas, after in others, with no clear pattern emerging

b. at about the same time as

If we add together Fogel's estimate of the benefits of the RR in the transport of agricultural products, in nonagricultural products, and in passenger service we get a figure that is ____ percent of GNP. a. less than five b. between five and ten c. between ten and twenty d. between twenty and thirty

b. between five and ten

The most important source of finance during World War I in terms of the proportion of the total war financed from that source was _____. a. taxes b. borrowing from the public c. creating new money d. borrowing from the federal reserve

b. borrowing from the public

Famed economist Robert Barro argued that wars should be financed mainly by ______ in order to _____. a. taxes, to show people the true cost of the war b. borrowing, to smooth taxes over time c. borrowing, to create a broader capital market for when peace returns d. printing money, in order to undermine the class of people who live on fixed incomes and therefore don't contribute to society.

b. borrowing, to smooth taxes over time

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

b. bucket shops

The "Credit Mobilier" was the corrupt company that a. was established as a savings bank for freed slaves after the Civil War b. built the Union Pacific railroad c. bribed Congress to discontinue the silver dollar in 1873 d. financed John D. Rockefeller's takeover of the oil industry

b. built the Union Pacific railroad

In class I noted that suicide rates in the United States were _____ in the immediate (1929-1930) aftermath of the Stock Market crash of 1929. a. below normal b. close to normal c. above normal d. unknown (the data is not available)

b. close to normal

The reasons for the persistence of the Great Depression are still debated by economists. Ben Bernanke's argument is that one reason the Great Depression lasted so long is that ____. (lecture and reading question) a. anti-business rhetoric from the Roosevelt Whitehouse discouraged investment. b. lending could not get started on a large scale until new relationships between banks and their customers could be forged to replace those lost when banks failed. c. Abandonment of the gold standard demoralized the business community

b. lending could not get started on a large scale until new relationships between banks and their customers could be forged to replace those lost when banks failed.

In class I argued that Southern secessionists used the Crisis of 1857 to their advantage by arguing that the crisis was ____ in the South than in the North and that this proved that _____. a. less severe, southern legislatures were not dominated by big business as were northern legislatures b. less severe, cotton was king c. more severe, that the South would suffer as long as it was tied to the North d. more severe, the Federal government was only interested in helping the North

b. less severe, cotton was king

It is a common pattern in the United States for depressions to follow financial panics. In class I argued that the depression that followed the Panic of 1837 was probably ____ severe than the depressions of the 1890s and 1930s in terms of unemployment because in the 1830s ____. a. more, a larger fraction of the labor force was engaged in agriculture b. less, a larger fraction of the labor force was engaged in agriculture c. more, a smaller fraction of the labor force was engaged in agriculture d. less, a smaller fraction of the labor force was engaged in agriculture

b. less, a larger fraction of the labor force was engaged in agriculture

Which of the following was not a characteristic of the era of the classical gold standard? a. fixed exchange rates b. low unemployment by modern standards c. relatively stable prices d. substantial long-term investment in the United States

b. low unemployment by modern standards

In 1930 after the great stock market crash of 1929, stock prices were a. lower than they had been for decades b. lower than at the peak, but above the levels of the mid-twenties c. higher than at the peak in 1929 (the "Morgan rally") d. higher than the prewar peak of 1913, but lower than at any time in the 1920s

b. lower than at the peak, but above the levels of the mid-twenties

After state governments defaulted on their debts in the 1840s most states _____. a. refused to pay anything to bond holders b. made an effort to repay some or all of their debts c. were sued by foreign bond holders d. were bailed out by the Federal government which followed Hamilton's debt policy

b. made an effort to repay some or all of their debts

When World War I broke out in August 1914 there was a wave of ______ on Wall Street and so ______. a. optimism, the stock market was closed for four months to prevent the market from draining funds from the war effort b. pessimism, the stock market was closed for four months to prevent Europeans selling their stocks and withdrawing their gold from the U.S. c. optimism, the Federal Reserve intervened by raising interest rates to prevent the market from going too high d. pessimism, the Federal Reserve intervened by lowering interest rates

b. pessimism, the stock market was closed for four months to prevent Europeans selling

In general, the settlement of the Midwest (Ohio, Indiana, Michigan, Illinois, and Iowa) occurred in waves driven primarily (according to the text and the lecture) by ___. a. prices of mineral resources, particularly iron ore b. prices of agricultural products, particularly corn and hogs c. similar waves on the stock market d. changes in the price of land set by the Federal government

b. prices of agricultural products, particularly corn and hogs

The settlement of the Midwest (Ohio, Indiana, Michigan, Illinois, and Iowa) before the Civil War occurred in waves driven, according to economic historian Douglas North. by _______. a. prices of mineral resources, most importantly iron and coal b. prices of agricultural products, particularly corn and hogs c. interest rates set by the Bank of United States and the Bank of England d. changes in the price of land set by the federal government

b. prices of agricultural products, particularly corn and hogs

During the Revolutionary War, The U.S. relied on "privateers" to attack British shipping, these were _____. a. another name for privates b. privately owned ships that legally captured British ships and sold their cargoes c. American pirates who operated illegally, but with the implicit consent of the public d. small raiders that were part of the American Navy

b. privately owned ships that legally captured British ships and sold their cargoes

In class I argued that the U.S. achieved an overwhelming level of military production in World War II primarily by _____. a. relying on imports of food, textiles, and other consumption goods while devoting domestic resources to military production b. pushing the economy toward the production possibilities frontier while reducing civilian consumption only slightly c. moving along the production possibilities curve from a primarily civilian economy to a mixed civilian and military economy d. relying on high-tech military weapons that did not require substantial amounts of resources to produce f. I have no idea what you are talking about.

b. pushing the economy toward the production possibilities frontier while reducing civilian consumption only slightly

Economic historians often distinguish between the First Industrial Revolution and the Second Industrial Revolution. According to the class lecture, the standard of living of the working class ______. a. rose substantially in the First Industrial Revolution, but not in the Second. b. rose substantially in the Second Industrial Revolution, but not in the First c. rose substantially in both the First and Second Industrial Revolutions d. did not rise substantially in either the First or Second Industrial Revolutions

b. rose substantially in the Second Industrial Revolution, but not in the First

Economic historians distinguish between the First Industrial Revolution which began in England in the eighteenth century and continued up to, say, 1850 and the Second Industrial Revolution which began about 1850 and continued to, say, 1900. According to the class lecture, the standard of living of the working class ______. a. rose substantially in the First Industrial Revolution, but not in the Second. b. rose substantially in the Second Industrial Revolution, but not in the First c. rose substantially in both the First and Second Industrial Revolutions d. did not rise in either industrial revolution

b. rose substantially in the Second Industrial Revolution, but not in the First

During the period 1800 to 1860 many people were concerned about speculation in public lands. One of the chief policies that this group advocated for preventing speculation was ___. a. preventing immigrants from buying land b. setting a high price for land c. setting a low but positive price for land d. setting the price of land (almost) at zero

b. setting a high price for land

The lesson that Germany and The Soviet Union took from the Spanish Civil War, according to the class lecture, was that _____. a. strategic bombing would be effective, but tactical bombing would be, therefore it was better to concentrate b. strategic bombing would not be effective, but tactical bombing would be c. both strategic bombing and tactical bombing would be effective d. neither strategic bombing nor tactical bombing would be effective, therefore it was best to concentrate on fighters that could defend against enemy aircraft

b. strategic bombing would not be effective, but tactical bombing would be

Which of the following statements describes the Federal Reserve in the summer before the stock market crash of fall 1929? a. the Fed wasn't worried about the stock market so it lowered interest rates b. the Fed was worried about the stock market so it raised interest rates c. the Fed wasn't worried about the stock market so it left interest rates unchanged d. the Fed was worried about the stock market so it left interest rates unchanged

b. the Fed was worried about the stock market so it raised interest rates

For the tenant in the Post-bellum south the advantage of renting for cash compared with sharecropping was that _____. a. the cash renter had more protection from persecution b. the cash renter realized all of the gains from extra effort c. renting for cash increased the capital/labor ratio d. under renting for cash the landlord bore some of the risk of a bad harvest.

b. the cash renter realized all of the gains from extra effort

One advantage of land grants to the RRs compared with cash subsidies (as revealed in the history of the transcontinental RRs) was that _____. a. the value of the land grants was easy to measure b. the land grants gave the railroad builders an incentive to build durable roads c. the land was mostly worthless, although many promoters didn't realize it so the government got something for virtually nothing d. there were no advantages, and few land grants were actually made

b. the land grants gave the railroad builders an incentive to build durable roads

This candy bar, according to Professor Rockoff (although probably not many other people) a good symbol of _____. a. the first industrial revolution b. the second industrial revolution c. cutthroat competition d. the positive impact of high tariffs f. a cause of the obesity epidemic g. something good to eat

b. the second industrial revolution

What did the Kennedy-Johnson economic team mean by the "New Economics"?

but President Kennedy's advisers believed in the "new economics"of John Maynard Keynes. They argued that as long as the economy was operating at less than full employment, a tax cut was justified because it would leave more income in the hands of the public, creating more demand for goods and services. A budget that was in deficit when the economy was at less than full employment, they pointed out, might turn out to be balanced or in surplus at full employment because tax revenues rise and certain categories of Federal spending (e.g., unemployment benefits) fall as the economy approaches full employment.

By 1960 approximately what percentage of American households owned a clothes washer? (Reading Question). a. 10 percent b. 25 percent c. 40 percent d. 75 percent g. This is a useless piece of knowledge and the one thing I will remember from this class

c. 40 percent

Sharecropping contracts in the postbellum South, like the Grimes contract discussed in class, normally called for the landlord to get ___% of the output. Therefore the plot of land the sharecropper was likely to be ____ on inferior (less productive) land. a. 50, smaller b. 75, smaller c. 50, larger d. 75, larger

c. 50, larger

According to the traditional view the cause of the Jacksonian inflation was _____, but according to the modern view the cause was ______. a. excessive issues of paper money by the Bank of the United States, An influx of gold from abroad b. the decrease in the power of the Bank of the United States to regulate private banks, An influx of silver from abroad c. An influx of silver from abroad, excessive issues of paper money by the Bank of the United States d. An influx of gold from abroad, the decrease in the power of the Bank of the United States to regulate private banks.

c. An influx of silver from abroad, excessive issues of paper money by the Bank of the United States

The New Deal followed policies aimed at both relieving distress and reforming the system to prevent future depressions. An example of the former is the ____ while the ___ is an example of the latter. a. Civilian Conservation Corps, Works Projects Administration b. Works Projects Administration, Industrial Organization Review Board c. Civilian Conservation Corps, Securities and Exchange Commission d. Federal Deposit Insurance Corporation, Industrial Organization Review Board

c. Civilian Conservation Corps, Securities and Exchange Commission

One reason the Fed failed to act properly, as defined in the class lectures, during the early years of the Great Depression was the power struggle between the New York Federal Reserve and the ____. a. Chicago Federal Reserve b. Bank of England c. Federal Reserve Board d. Hoover Administration

c. Federal Reserve Board

In World War I the Food Administration was headed by _____. a. Bernard Baruch b. Woodrow Wilson c. Herbert Hoover d. Harry S Truman

c. Herbert Hoover

Adam Smith's great book The Wealth of Nations was an attack on the doctrine of _____. a. Communism b. Syndicalism c. Mercantilism d. Laissez Faire

c. Mercantilism

The South's cotton embargo produced a "cotton famine" in England during the Civil War, but this did not have the desired effect on British policy of forcing Britain to intervene on behalf of the South. Which of the following was not one of the factors stressed in class for the failure of the cotton famine to force the British to help the Confederate government? a. Producers of linen in Ireland opposed helping the South b. Large cotton textile makers thought that the famine was hurting their smaller rivals more than it was hurting them c. Textile firms in England shifted to producing gunpowder and ammunition for the Union army d. Production of cotton in India and Egypt began to increase

c. Textile firms in England shifted to producing gunpowder and ammunition for the Union army

Alexander Hamilton created the American dollar which he based primarily on the _____. a. The British Pound b. The Dutch Guilder c. The Mexican Peso d. The French Euro

c. The Mexican Peso

In his First Inaugural Address Franklin Roosevelt said: a. Ask not what your country can do for you, but what you can do for your country b. I see one third of a nation, Ill-housed, Ill-clad, Ill-nourished c. The only thing we have to fear is fear itself. d. Our strong purpose is to protect and to perpetuate the integrity of democracy

c. The only thing we have to fear is fear itself.

In class I interpreted the Wizard of Oz as a monetary allegory. According to this interpretation the Cowardly Lion is _____. a. Mary Elizabeth Lease b. Mark Hanna c. William Jennings Bryan d. L. Frank Baum

c. William Jennings Bryan

John Maynard Keynes thought that the estimate of the amount of reparations Germany was required to pay in World War II to make up for the damage Germany had caused was ____ because _____. a. too high, prices for land and other resources had risen during the war b. too low, prices for land and other resources had risen during the war c. too high, only a small percentage of land in France was damaged by the war d. too low, because the environmental damage done by the war extended far beyond the area where the actual fighting took place

c. too high, only a small percentage of land in France was damaged by the war

The "safety valve," as applied to nineteenth century America, refers to the idea that a. frontier violence was the natural outcome of the isolated lives lived by the pioneers b. early steam engines exploded because they did not include an outlet for steam c. unemployment was low, and hence interest in left-wing labor movements was low because workers could always move to the frontier d. farm incomes in the Midwest were relatively high because less productive farmers were constantly being drawn to the new cities developing in the Midwest

c. unemployment was low, and hence interest in left-wing labor movements was low

Which of the following interest groups, according to economic historian Gary Libecap, was particularly important (had a lot of clout) in getting the Sherman Antitrust Act passed? (Lecture and reading question) a. coal mining companies b. American tobacco company c. American Bar Association d. Cattleman's associations

d. Cattleman's associations

Suppose we wanted to know whether James B. Duke or Bill Gates was wealthier in the sense of which man had the most economic "power." Then we would probably want to inflate Duke's wealth using ____. a. the consumer price index b. the wholesale price index c. the long-term rate of interest d. GDP

d. GDP

The Great Contraction of 1929-1933 was an international event in which many nations suffered banking crises and contractions of industrial production. Some, however, suffered more than others. Which of the following industrial nations suffered a banking panic and industrial contraction similar in magnitude (in percentage terms) to that experienced in the United States? a. Britain b. France c. Japan d. Germany

d. Germany

During the panic of 1907 this famous investment banker tried to stop the panic by organizing investments in the stock market and weak banks. a. Oliver Sprague b. Oliver Warbucks c. Paul Warburg d. J.P. Morgan

d. J.P. Morgan

In class I discussed the costs and benefits to the Americans of being a British colony. I claimed that the greatest benefit for the colonials was ____. a. Subsidies for the production of naval stores such as masts for British ships b. Protection in the British market from competition from foreign producers c. The requirement that ¾ of the crews of American merchant ships be British or American d. Military protection provided by the British army and navy.

d. Military protection provided by the British army and navy.

How were property rights first established in the California gold fields after the discovery of gold in 1848? (Reading Question, 8:145-146.) a. Detailed maps were created by the Federal Land Office. The miners had to claim the land they worked, but were given title to it as if they were homesteaders b. The Mexicans had already established property rights, and these were "reallocated" to American miners c. Property rights were established by the U.S. Army after they were called into the goldfields to establish order. d. Property rights were established by the miners themselves at meetings they held

d. Property rights were established by the miners themselves at meetings they held

The Panic of 1873 was triggered by the failure of Jay Cooke and Company which had invested heavily in _____. a. U.S. government bonds b. Real estate in New York and San Francisco c. the Anaconda Copper Mine d. The Northern Pacific Railroad

d. The Northern Pacific Railroad

Adam Smith's great book which attacked the doctrines of the Mercantilists, and founded the modern discipline of economics, was _______. a. The Principles of Political Economy b. A Critique of the Continental System c. Progress and Poverty d. The Wealth of Nations

d. The Wealth of Nations

Adam Smith used the example of _____ to illustrate how the specialization made possible by the factory system increased production. a. a steam engine b. a cotton textile mill c. an iron foundry d. a pin factory

d. a pin factory

Suppose we compare the "income" (market basket of goods consumed) of sharecroppers with the income of slaves. Which of the following statements is true before an allowance is made for the increase in leisure time available to sharecroppers. a. sharecroppers had lower material incomes than slaves because of the lack of human capital of the former slaves, activities of Ku Klux Klan, and so on. b. substantial gains were made immediately after the Civil War, but they slipped away; by 1879 the income of sharecroppers was the same as the income of slaves. c. sharecroppers had a lower level of income than slaves because the deterioration in the market for southern staple commodities such as tobacco and cotton d. by 1879 the income of sharecroppers was larger than the income of slaves, although the increase was no larger than the increase achieved by northern workers over the same period.

d. by 1879 the income of sharecroppers was larger than the income of slaves, although the increase was no larger than the increase achieved by northern workers over the same period.

Consider the following table. It shows annual rate of growth of the manufacturing sector in the United States before and after the Civil War. Which column has the right figures? Period Years A B C D Before the war 1840-1859: 5% 4% 2% 7.8% After the war 1879-1899: 6% 8% 8% 6.0% a. column A b. column B c. column C d. column D

d. column D

The "Engerman-Sokoloff thesis" attributes the historical backwardness of the Southern educational system to ____. a. the destruction wrought by the Civil War b. southern religious traditions that stressed strict adherence to biblical texts c. attempts by a federal government controlled by industrial regions to suppress southern competitiveness d. control of educational spending by landowners intent on maximizing profits from production of labor intensive cash crops

d. control of educational spending by landowners intent on maximizing profits from production of labor intensive cash crops

During the Great Depression John Maynard Keynes criticized traditional economists such as A.C. Pigou who claimed that the slump could be cured by ___ a. cutting immigration b. cutting government spending and taxes c. massive government employment programs d. cutting wages

d. cutting wages

Economists have frequently used _____ to estimate consumption of alcohol during prohibition. a. per capita production of beer, alcohol, and wine including production for "medicinal purposes," in the United States b. excess production in the rest of the world (mainly production in Canada and Mexico less pre-prohibition production) c. arrests for violations of the prohibition laws 20 d. deaths from cirrhosis of the liver

d. deaths from cirrhosis of the liver

The price level began to rise after 1896 until World War I. In class I attributed this rise to a. Federal Reserve policies b. Bank of England policies c. U.S. trade deficits and the falling dollar d. discoveries of gold in South Africa

d. discoveries of gold in South Africa

Which of the following interest groups, according to the text and class lecture, was instrumental in getting the Sherman Antitrust Act passed by Congress. a. western silver mines b. eastern coal mines c. midwestern producers of consumer durables d. eastern slaughter houses

d. eastern slaughter houses

To estimate the benefits of the Railroad that derived from the increased speed of the railroad, Robert Fogel examined. a. rents on Midwestern farm land b. charges for express delivery by canals c. charges for express delivery by railroads d. inventories of agricultural products held by eastern merchants

d. inventories of agricultural products held by eastern merchants

One of the greatest advantages of the railroad over earlier forms of transportation was its speed and its ability to stay open throughout the winter. Robert Fogel attempted to measure the impact of these advantages for eastern wholesale distributors and retailers of commodities by examining ___. (Lecture and reading question). a. the profits of transportation industries as a group b. the profits of railroads compared with the profits of canals c. employment of labor and capital in the transportation sector before and after the railroad d. inventories of agricultural products held in eastern markets

d. inventories of agricultural products held in eastern markets

What did Ben Bernanke say to Milton Friedman at Milton Friedman's 90th birthday party?

do more harm than letting it reach its peak and deflate on its own. In 2002, at a celebration of Milton Friedman's 90th birthday Bernanke made the following promise:"I would like to say to Milton and Anna [Anna Jacobson Schwartz, the coauthor of A Monetary History of the United States]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." Remarkably, just five years later Bernanke was faced with a crisis similar to the Great Depression. And Bernanke kept his promise. The Federal Reserve acted aggressively, far more aggressively than it had in the Great Depression, to stem the rising tide of fear, and as a result probably averted a much worse debacle.

forced uptrading

eliminating lower priced lines of merchandise

Across the bridge that arched the flood Their flag to April's breeze unfurled Here once the embattled farmers stood and _____.

fired the shot heard round the world

W. C. Fields quotes (American Film Star): • "Once, during Prohibition, I was forced to live for days on nothing but ____ and ____."

food and water

The inflation in the United States during the first half of the 1850s was caused by

gold

What was the chief economic problem faced by the Carter administration?

inflation

buying on margin

maximizes profits as well as losses

Why was labor optimistic in the immediate aftermath of World War I?

money earnings leaped upward in 1918 by some 22.6 percent, outrunning the cost of living, although it is difficult to be certain about this because price controls distorted the meaning of price indexes. Indeed, real earnings may well have reached an all-time high.

Liquidity Crisis

scramble for cash by the public and the banks leads to a collapse of lending and spiking interest rates.

There is a picture in the textbook of Charlie Chaplin yelling at a crowd. Why is he yelling at the crowd?

selling war bonds.

The Jacksonian Inflation was caused by

silver

What was the Treasury-Fed Accord?

the Treasury-Fed Accord was the joint statement issued by the agencies said that they had reached"full accord."The main point was that the Fed would be allowed to limit its purchase of government debt even if the result was higher interest rates. The Accord permitted the Fed to follow a noninflationary monetary policy during the war; for the entire period of the war, money per unit of real GDP actually fell slightly.

What did the United States do differently then Canada leading up to the Great Depression?

the U.S. has a - Fragmented unit banking system - Undiversified bank portfolios and deposits. When agricultural prices fall or bad loans because of recession Many banks become insolvent. • Fear of insolvency feeds the panic, generating a liquidity crises as the public and banks scramble for cash

Winston Churchill, First Speech as Prime Minister May 13, 1940: • I have nothing to offer but blood, ____, ____, and _____."

toil, tears and sweat

Ronald Reagan: "Ask yourself, Are you better off now than ____."

you were four years ago?