Chapters 8 - End

1.The deflation that manifested itself in 1920:

a. occurred all around the world at the same time (in May).

b.occurred across all sectors of the American economy at the same time (in May).

c.None of the above.

2.Comptroller of the Currency Williams wrote to Fed Governor Harding in late 1920 to argue that:

a.the Fed's interest rate policy needed to be reversed and rates lowered.

b.the Fed's interest rate policy was necessary to keep holders of monetary wealth from suffering losses.

c.big New York banks needed to borrow more from the Fed in order to alleviate the crisis.

3.In November of 1920 the New York Times noted that this depression was odd in that:

a.prices had not yet fallen in any significant way.

b. a bank panic had not occurred.

c.stock prices had continued to rise throughout the year.

4.Fed Governor Harding contended that their 7% interest rate policy:

a.prevented "one of the greatest financial cataclysms of modern times."

b.had "saved the nation and protected the world."

c.was largely ineffective in reducing inflation, but helpful for borrowers and lenders alike.

5.Guaranty Trust was able to accept deposits like a commercial bank but because it was a trust, it could also:

a.make deposits in other banks.

b.issue its own bank notes.

c.invest funds in real estate.

6.John Williams was a member of the Federal Reserve Board because he was:

a.the Secretary of the Treasury.

b.Comptroller of the Currency.

c.President of the New York Federal Reserve District Bank.

7.At Congressional hearings in August of 1921, Fed Governor Harding _____ former Federal Reserve Board member John Williams.

a.politely agreed

b.politely disagreed

c.tried to physically attack

8.The election campaign of 1920 between Harding and Cox:

a.had little or nothing to do with the state of the economy.

b.was almost completely framed around support for/against the League of Nations treaty.

c.saw numerous debates between the two of them all over the country.

9.Which of the following was true about Eugene Debs, a minor party candidate for president in 1920?

a.He was a socialist.

b.He was in jail.

c.Both of the above.

10.At the close of his campaign, Democratic candidate James Cox said, "Every _____ in America will vote tomorrow for Warren G. Harding."

a. patriot

b.traitor

c.greedy businessman

11.The results of the election of 1920 were that Harding:

a.won in a landslide with increasing Republican control of the Congress.

b.won in a landslide with decreasing Republican control of the Congress.

c.won a very close election where the Republicans lost control of the Congress.

12.President Harding's nominee for Secretary of the Treasury was:

a.Andrew Mellon.

b.John Skelton Williams.

c.Russell C. Laffingwell.

13.The proposal for a government bonus to veterans was expected to cost:

a.less than $1 billion.

b.between $3 billion and $5 billion.

c.about $10 billion.

14.From 1920 to 1922 the federal government ran:

a.ever growing surpluses.

b.ever growing deficits.

c.constant balanced budgets.

15.While speaking before the Senate, _____ said, "Our Government must undertake no obligation which it does not intend to meet."

a.Grover Cleveland

b.Woodrow Wilson

c.Warren G. Harding

16.Mellon's philosophy about managing government finance is referred by Grant as:

a.Washingtonian.

b.Hamiltonian.

c.Jeffersonian

17.As soon as he was a member (ex-officio) of the Federal Reserve Board, Secretary Mellon urged that interest rates:

a.continue to be raised.

b.be held constant for the foreseeable future.

c.be lowered.

18.The basic tax code consisted of a 4% tax on incomes less than $4,000 per year and _____ on incomes greater than that.

a.8%

b.15%

c.23%

19.As the Federal Reserve increased interest rates to promote deflation:

a.wages continued to rise.

b.wages held steady.

c.wages also began to fall.

20.As of 1920, the U.S. Steel Company employed about:

a.25,000 workers.

b.250,000 workers.

c.over 1 million workers.

21.Elbert H. Gary, who ran the U.S. Steel Company, was once a:

a.judge.

b.police officer.

c.major in the U.S. Army.

22.After being elected, President Harding proposed the creation of a new cabinet department for:

a.public welfare.

b.education.

c.the environment.

23.Urbain Ledoux theatrically highlighted the plight of the unemployed in Boston by portraying an unemployed man as:

a.seduced by a serpent with an apple in the Garden of Eden.

b. a slave being sold at auction.

c.the victim of a horrible gas attack while fighting in the trenches in France.

24.The NBER would later decide that our economic recovery from the bottom of the business cycle began _____ Hoover's famous conference on unemployment.

a.before

b.during

c.after

25.Ex-Comptroller Williams warned Treasury Secretary Mellon of potential collapse of the Mercantile Bank, which was heavily invested in:

a.South America.

b.Africa.

c.Russia.

26.In 1920, the Fed's holdings of gold was barely 40% of the value of circulating currency. By May 1921 this figure was about:

a.25%.

b.45%.

c.80%.

27.During the recovery year of 1922:

a.industrial production rose more than 25%.

b.employment was basically unchanged.

c.auto production continued to fall.

28. During the depression of 1920-1921 a record number of:

a.national banks failed, especially those with capital in excess of $100,000.

b.state banks failed.

c.Both of the above.

29.Grant argues that the strong recovery in 1922 was due, at least in part, to:

a.the deflation of 1920-1921.

b.the willingness and ability of businesses to replace depleted inventories.

c.Both of the above.

30.With regard to political events following the depression of 1920-1921, which of the following is true?

a. In 1922 Democrats took control of both houses of Congress.

b.In 1923, President Harding died.

c.In 1924, Herbert Hoover won the presidency in a landslide.

31.In 1923 the Fed rewrote their mission statement so that they could pursue a policy of:

a. stabilizing prices.

b.strict adherence to the gold standard.

c.full employment.

32.Throughout the 1920s unemployment in Britain remained high because:

a.there was a persistent shortage of workers even in the face of falling prices.

b. unemployment insurance meant workers need not accept lower wages.

c.they had returned to a gold standard.

33.From 1922 to 1929 the policy of the Fed led to:

a.stable prices as measured by standard price indices.

b. significant increases in the size of the Fed's balance sheet.

c.Both of the above.

34.As Grant puts it, with regard to the Fed and the 1920-1921 depression:

a.the policy failed but the depression succeeded.

b.the depression failed but the policy succeeded.

c.both the policy and the depression failed.

35.Which of the following people that Grant has incorporated into his story of the "forgotten depression" did not die during the 1920s?

a.Ex-Comptroller of the Currency John Skelton Williams.

b.New York Fed President Benjamin Strong.

c.Kansas City businessman Harry S. Truman.

36.To deal with the Great Depression, Herbert Hoover's primary focus was to:

a.keep wages from falling.

b.keep prices from falling.

c.encourage rapid liquidation by the business sector.