Health care debates illustrate how special interest groups can use their lobbying power
to “control” the federal government to transfer wealth from one group of productive,
income earning individuals to another group that may or may not be productive.
The real purpose of the Webb-Pomerene Act of 1918 was to alter the terms of trade in
favor of the United States.
Olson (1971) claims that unions strive for job monopoly to achieve their goals by
coercion.
Engel’s Law asserts that consumer expenditures on daily food in the aggregate decline
as incomes rise. This explains the decreased demand for daily foods and the increased
U.S. demand for exotic foods.
The Gallatin Plan (1808) was not passed because some individuals questioned its
constitutionality.
Under English law, the rights of colonists differed from those of the English.
Information and opportunity costs affected patterns of emigration to the U.S.
Economic history shows that stock market averages are useful predictors of the future.
From the late 1860s until 1907 the U.S. averaged a four percent or more increase in the
real value of the goods and services produced.
The rise in output of corn and wheat was achieved more by increasing acres farmed
than by raising output per acre.
North’s (1955) theory of economic location is that of “balanced growth”many industries
in each region must advance at about the same time in order for economic growth to
occur.
The low interest rates that prevailed after 1942 made World War II (1941″45) financing
problems fundamentally the same as World War I (1914″18).
The amount earned by the tertiary laborer is determined by labor productivity in the
primary and secondary sectors of the U.S. economy.
Between 1810 and 1850, the U.S. population living in the trans-Appalachian states
increased significantly.
International trade was not important to the industrializing U.S. since it was relatively
rich in raw materials and land.
Colonialists tried to attract precious metals and coins by raising or attempting to raise
the colonial price of the foreign money. This is called devaluation.
After the Civil War, wheat production became regionally specialized and output
production in the Midwest increased consequently.
The value of the output produced in an economy reflects the value of the income
generated by the factors of production used to produce that output.
Industrial growth and location changed while manufacturing employment rose in the
Sun Belt and fell in the Frost Belt. This growth and relocation were primarily due to the
relocation of plants, functions and people moving from the Frost Belt to the Sun Belt.
English mercantilism recognized the law of comparative advantage, thus permitting
individuals to specialize in producing those goods and services which they could
produce at relatively low opportunity costs and trading those items for those which they
could not.
The 1819 panic was caused by the Second Bank of the United States, which called on
the state banks to redeem their notes in order to acquire $4 million in specie to pay the
borrowing that had been undertaken in Europe in 1803 to finance the Louisiana
Purchase.
During the post-bellum period, growth in demand outpaced growth in supply, causing
food prices to fall.
The Field Hypothesis (2003) suggests that production possibilities expanded during the
depression years. Much of the resulting increase in potential went unrealized, though.
This explains why potential output in 1942 was greater than expected.
Adam Smith (1776) is primarily associated with the theory that industrialization
proceeds at the expense of the working class.
The value of output produced in colonial America equals the value of income generated
by the productive resources (land, natural resources, labor, capital and entrepreneurial
talent) used to produce that output.
Southern plantation owners benefited from British policies on tobacco production in the
United Kingdom.
During the Great Depression, the U.S. was not firmly tied to the world economy.
Railroad competition was the primary cause of canal failures.
Like the two world wars, the Korean War (1950″53) produced shortages of resources,
labor and output due to large-scale foreign military deployments and demands for the
production of war-related goods and services.
Even though government-operated firms do not have to make a profit, they usually
operate efficiently.
The object of the Northwest Ordinances of 1785 and 1787 was to preserve the public
domain from private exploitation.
Attitudes toward public land use have changed numerous times since the late 1800s.
A strong majority of economists support the proposition that the material, not
psychological, conditions of the slaves compared favorably with those conditions faced
by industrial workers before the Civil War.
The Second Bank of the United States was deemed unconstitutional and, therefore, its
charter was not renewed.
In 1860 government revenues exceeded the earnings of cotton exports by fourfold.
Long information lags, bad harvests, high degrees of government intervention in private
affairs and other “push-effects” often decreased net migration in the U.S.
Intangible assets like stocks and bonds were created by U.S. industrial firms and traded
elsewhere for capital funds. This activity eventually gave rise to investment banking.
The U.S. transfer system takes funds from the rich and distributes them to the poor. This
transfer has significantly impacted income equality in the U.S.
Physical destruction of property during the Civil War (1861″1865) occurred on a wide
scale in both the North and the South.
Which of the following was a source of the U.S. federal government’s financial revenue
for World War II (1941″45)?
(a) Tariffs
(b) Bond sales to other governments
(c) Bond sales to the Federal Reserve System
(d) Bond sales to the U.S. Congress
In implementing the Marshall Plan (1948″51),
(a) the United States discouraged European countries from cooperating among
themselves to increase trade, as it was felt that economic recovery would be better
achieved through competition.
(b) the United States, in order to offset the large capital outflow caused by loans and
grants made abroad, tried to maintain a balance of payments surplus.
(c) the United States offered financial aid to many of the economies in Western Europe
devastated by World War II.
(d) the U.S. dollar was devalued 30% against other world currencies.
A current account deficit exists when
(a) Government revenue exceeds spending
(b) Government spending exceeds revenue
(c) Imports exceed exports
(d) Exports exceed imports
In which case did the U.S. Supreme Court decide the Constitution was “intended to
endure for ages to come and, consequently, to be adapted to various crises of human
affairs”?
(a) Nebbia v New York (1934)
(b) Munn v Illinois (1877)
(c) McCulloch v Maryland (1819)
(d) Dartmouth College v Woodward (1819)
The Land Ordinances of 1785 and 1787 established property rights in land that
provided for all of the following except
(a) Perpetual ownership, if desired
(b) Direct inheritance
(c) Complete freedom to sell as desired
(d) Required inheritance through the principle of primogeniture
When the theory of mercantilism was superseded by the theory of “classical liberalism”
of Adam Smith around the time of the American Revolution,
(a) the colonies had shifted toward laissez faire, governmental noninvolvement in the
private economy, but the new nation rejected the philosophy of laissez faire.
(b) governmental involvement in the private economy persisted in both the colonies and
the new nation; the U.S. Constitution adopted the common law from England which
sanctioned certain types of governmental involvement.
(c) governmental involvement had already been largely abandoned in the colonies and
laissez faire was officially adopted by the new nation.
(d) government involvement was strong down to the time of the Revolution; it was then
abandoned and laissez faire was enshrined in the Constitution and became part of the
law of the land.
Hughes and Cain (2011) talk about falling levels of investment during the Great
Depression. What does the “investment” that they are talking about refer to?
(a) Engineering ideas behind the industry of the era
(b) Money loaned by banks to consumers
(c) Land, labor, and equipment used in production
(d) Tools, equipment, machines, and buildings used in production
Which of the following are arguments that have been and currently are used to justify
protectionism?
(a) The infant industry argument
(b) Tariffs create lower profits, generate fewer jobs, and reduce wages in the U.S.
(c) Countries should not operate on the basis of comparative advantage.
(d) All of the above
During the postbellum period of U.S. history,
(a) the U.S. balance of payments experienced a deficit throughout the entire period.
(b) manufacturing exports became the top foreign exchange earner.
(c) cotton exports continued to be the top foreign exchange earner.
(d) the U.S. never borrowed from foreigners.
The Immigration Act of 1965
(a) helped pick up the pace of immigration in the U.S., effectively increasing the
supply of highly skilled laborers.
(b) imposed country quotas on the number of U.S. immigrants.
(c) encouraged immigration on the basis of skill, political asylum and family
reunification.
(d) can be characterized by all of the above.
U.S. automobile manufacturers chose not to switch to producing subcompact cars for
which of the following reasons?
(a) They did not perceive the U.S. demand for subcompacts as permanent.
(b) This switch was not economically feasible in the long run.
(c) Government policy prevented them from doing so.
(d) All of the above.
The U.S. Supreme Court ruled that the tax on food processors in the 1933 Agricultural
Adjustment Act (AAA) was unconstitutional.
Who does inflation benefit?
(a) All businesses
(b) The government
(c) Individuals living on fixed incomes
(d) Debtors
In the pivotal Supreme Court decision Munn v Illinois (1877), the court held that
(a) natural monopolies were subject to government regulation.
(b) business in interstate commerce was subject to regulation.
(c) any business, whether or not a natural monopoly, or whether or not it was in
interstate commerce, may under certain circumstances be subject to regulation.
(d) only businesses chartered (licensed) by governments could be subjected to
government regulation.
The “rules of the game,” if followed closely by central banks, would have
(a) made trade fluctuations worse than they were.
(b) wiped out trade fluctuations.
(c) “neutralized” central bank policy.
(d) forced the federal government to borrow directly from central banks.
What is/are the advantage(s) of the gold standard?
(a) The government can print money as required by cyclical fluctuations in domestic
markets.
(b) Floating exchange rates.
(c) It requires monetary discipline.
(d) All of the above.
Davis (1963) compares U.S. and British industrialization. What does he note in each
country during industrialization?
(a) A rise in the number of giant banks in both countries
(b) A rise in the number of small banks in the U.S. but a rise in the number of giant
banks in Great Britain
(c) A rise in the number of small banks in Great Britain but a rise in the number of giant
banks in the U.S.
(d) A decrease in capital accumulation because of a small number of free banks
Economic historians do not believe there was a shortage of money in colonial America
for which of the following reasons?
(a) Interest rates were not unreasonably high.
(b) Long-term prices were rising.
(c) The colonial economy was growing in real terms.
(d) All of the above.
Colonists supporting the American Revolution (1775″1781)
(a) were well-prepared and well-organized.
(b) comprised at least two-thirds of the total colonial population.
(c) faced lower transportation and communication costs than the British during the war.
(d) were able to tax the colonists to finance the war.
Schumpeter asserts all of the following except
(a) A strong middle class fosters growth in society’s entrepreneurial base.
(b) Entrepreneurs are the leading force behind technological advancement.
(c) Invention and innovation are unnecessary in a growing economy.
(d) Secured property rights encourage risk-taking entrepreneurial behaviors.
By almost every measure of social and economic well-being, for how long after the
Civil War (1861″1865) did the South lag behind the rest of the country?
(a) For almost a century
(b) For almost a decade before it adapted to life without slavery
(c) For only two decades
(d) Right down to the present day
Which of the following World War I (1914″18) institutions reappeared in various forms
during the Great Depression and/or World War II (1941″45)?
(a) The U.S. Grain Corporation
(b) The War Industries Board
(c) The United States Housing Corporation
(d) All of the above
Populists proved themselves to be strong “quantity theory” activists by
(a) pushing the government to provide a general level of money demand that could be
kept abreast of farm output.
(b) advancing public education and woman suffrage efforts.
(c) trying to prohibit corporate subsidies.
(d) seeking to reserve land and other natural resources for farm and conservation use.
Which event in business regulatory history permitted government intervention in
industry affairs?
(a) The case of Munn v Illinois (1877)
(b) The Sherman Act of 1890
(c) The case of Nebbia v New York (1934)
(d) The creation of the Interstate Commerce Commission via the Interstate Commerce
Act of 1887
The First Continental Congress met in September and October of 1774 and listed
several complaints against the British government, including
(a) an objection not to the Navigation Acts but to the taxation without consent.
(b) the argument that they were entitled to all the rights of British citizenship.
(c) the demand that virtually all of the laws passed by Britain on the colonies since
1763 be repealed.
(d) all of the above.
With regard to agricultural productivity (grain crops) in the post-Civil War period
(1870″1910),
(a) output per acre went up significantly.
(b) output per man-hour went up significantly.
(c) output per unit of energy input went up significantly.
(d) all of the above occurred.
Unions have been protected since 1935 by a federal law, the National Labor Relations
Act (NLRA), which contains provisions for
(a) elections by workers to choose their bargaining agents.
(b) employers’ recognition of union bargaining agents in interstate commerce for union
representation and collective bargaining purposes.
(c) arbitration of disputes that cannot be resolved through bargaining.
(d) all of the above.
Which of the following methods was NOT used to help the North finance the Civil
War (1861″1865)?
(a) Selling large amounts of bonds
(b) Issuing fiat Federal paper money
(c) Raising taxes
(d) Selling confiscated property
With regard to the question “What were the lives of those who died in the Civil War
(1861″1865) worth?” Hughes and Cain (2011) conclude that
(a) there is no way to answer this question because people have infinite worth.
(b) an estimate can be made by calculating the value of the loss of “human capital.”
(c) the worth was close to zero because of the surplus of population that existed at the
time.
(d) the worth of Northern lives lost was greater because the Northerners were fighting
against the evils of slavery.
The “Walker thesis,” that falling birth rates among native-born Americans was due to
immigration, is reinforced by the view that immigrants were a direct capital transfer
from Europe to America.
Special interest groups (such as doctors, teachers, lawyers, health insurance companies,
the automobile industry and others) can best be characterized by which of the following
statements?
(a) They are constantly working the government to seek rents from policy decisions.
(b) They are resistant to change in governmental policies that benefit them at the
expense of others.
(c) They help push through federal policies that result in technological backwardness,
low productivity and less overall economic growth.
(d) They can be characterized by all of the above.
During the decade of the 1920s, the U.S. economy
(a) was generally healthy and gave no indication of the troubles that lay ahead
regarding the Great Depression.
(b) was relatively stagnant in terms of growth of total output with small declines in
agriculture and housing, which suggested that difficult times might lie ahead in the
1930s.
(c) experienced actual declines in overall production levels, including agriculture and
housing, which suggested that even more difficult times probably lay ahead.
(d) experienced relatively rapid growth in overall output but in the late 1920s
nevertheless showed weaknesses in certain sectors such as agriculture, housing and the
financial sector, which suggested the possibility of difficult times ahead.
Which type of business organization is the most important part of U.S. history given its
‘super” economic powers?
(a) Sole proprietorship
(b) Partnership
(c) “Mom and pop” business, which is a mix of sole proprietorships and partnerships
(d) Corporation
What was the primary reason the Income Tax Amendment of 1913 was passed?
(a) To pay off the public debt accumulated during the Civil War (1861″65)
(b) To pay off the public debt accumulated during World War II (1941″45)
(c) To grant the federal government access to revenues beyond those from land
sales, customs and excise taxes
(d) To pay off the current account deficit
What are demand deposits?
(a) Money held by private individuals or corporations placed in depository accounts at
banks
(b) Liabilities (things that are owed) to banks and assets (things of value) to depositors
or bank customers
(c) Checking accounts that depositors can use on demand
(d) All of the above