America's Great Depression Chapter 4

10 Questions

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Great Depression Quizzes & Trivia

This is a 10-question quiz on Chapter 4: The Inflationary Factors from America's Great Depression by Murray Rothbard.


Questions and Answers
  • 1. 
    Why does Rothbard consider statistical facts to be methodologically defective for testing Austrian economic theory?
    • A. 

      Statistical science is fundamentally unreliable.

    • B. 

      Government statistics cannot be trusted due to political pressures.

    • C. 

      Statistics cannot describe possible but unrealized events.

    • D. 

      Keynesian economists who create the statistics are biased against Austrians.

  • 2. 
    Which of the following is NOT a component of the U.S. money supply?
    • A. 

      Demand deposits

    • B. 

      Time deposits

    • C. 

      Life insurance surrender liabilities

    • D. 

      Corporate equities

  • 3. 
    What was the average annual rate of increase in the money supply  from 1921 to 1929?
    • A. 

      2.5 percent

    • B. 

      5.0 percent

    • C. 

      7.7 percent

    • D. 

      224 percent

  • 4. 
    What is the most important element in the money supply?
    • A. 

      Commercial bank credit base.

    • B. 

      Savings bank credit base.

    • C. 

      Savings and loan association shares.

    • D. 

      Life insurance liabilities.

  • 5. 
    Why was the relative expansion of time deposits compared to demand deposits an important inflationary factor in the 1920s?
    • A. 

      Because money deposited in time deposits funded the increase in risky stock investments.

    • B. 

      Because time deposits had a lower reserve requirement.

    • C. 

      Because time deposits paid higher rates of interest.

    • D. 

      Because time deposits could be used for investment leverage.

  • 6. 
    What is the preeminent controlled factor of increasing bank reserves?
    • A. 

      New bills discounted by the Federal Reserve.

    • B. 

      Treasury currency outstanding.

    • C. 

      Federal Reserve assets purchased.

    • D. 

      Treasury cash holdings.

  • 7. 
    What does Rothbard assert was the crucial difference between the deflationary periods X and XII prior to the Great Depression?
    • A. 

      Time deposits fell by $70 million in XII

    • B. 

      Demand deposits increased by $85 million in XII

    • C. 

      Life insurance policies declined by 25 percent in X.

    • D. 

      Gold prices increased 18 percent in XII

  • 8. 
    What is an acceptance?
    • A. 

      A contract to pay when an equity price falls to an acceptable level.

    • B. 

      A mortgage bank's agreement to a loan restructuring to avoid foreclosure.

    • C. 

      A leveraged life insurance investment.

    • D. 

      A bill sold by borrowers to dealers or banks who in turn sell the bills to the Federal Reserve System.

  • 9. 
    _______ was one of the leading borrowers on the American market during the 1921-1929 boom.
  • 10. 
    Who was the individual primarily responsible for the Federal Reserve's policy of purchasing U.S. government securities?
    • A. 

      John Maynard Keynes

    • B. 

      Benjamin Strong

    • C. 

      Adolph Miller

    • D. 

      Alan Greenspan