Book Title
American Economic History (Pearson Series in Economics) 8th Edition

HIS 86156

July 16, 2017
Even in 1928, non-bank sources provided more funds for brokers' loans in the stock
market than did the nation's banks.
The stock market boom in 1922"1929 seems "rational" enough if you take into account
the expansion of the money supply in the same period.
The Articles of Confederation and Perpetual Union (1781) adequately addressed the
free-rider problems by setting up a tax system that required all states to share the costs
of providing national defense, protecting private property rights, regulating commerce
with other countries and across states and upholding a system of laws.
The U.S. economy is not a perfectly competitive market. There are costs associated
with negotiating contracts, enforcing agreements, taxes and less than perfectly
competitive firms. Nevertheless, according to Wallis and North (1986), the U.S.
economy has grown in the presence of these transaction costs and these costs have risen
sharply as a percentage of GDP between 1890 and 1970.
According to the quantity theory of money, inflation results when excessive paper
money is in circulation.
All economists agree that World War II (1941"45) was responsible for ending the Great
Electricity and internal combustion engines are general-purpose technologies. They
permit the functioning of a wide range of goods, service and production systems.
There was a silver lining during the Great Depression. Compared to other periods in
U.S. history, this period was one of the most technologically advanced.
Charles Beard (1935) argued that the economic self-interest of businessmen, merchants,
manufacturers, bankers and investors led them to convene at the Constitutional
Convention in the late 1770s. They believed that creating a new, or at least modified,
system of laws would
help them advance the projects in which they were interested at minimal cost.
The U.S. imposed high tariffs in the early nineteenth century in retaliation for British
tariffs imposed on American goods.
After 1616, Virginia shifted more and more scarce resources out of food production and
into tobacco production. Hence, the economic cost of tobacco production included the
sacrifice of food production.
The Darby (1976) revisions of the 1930s unemployment data show that if you count
public employment, then the 1930s were not especially severe by historical standards.
The rise in European protectionism helped the U.S. economy by increasing foreign
demand for agricultural goods.
Employers resist organized labor because its activities threaten the rights of real
property in business enterprise.
Between 1790 and 1860, Southern population growth was dominated by growth in the
slave population.
The tertiary sector of the economy employs housecleaners, restaurant help and hotel
employees; it does not employ private consultants, accountants, nanotechnologists,
managers and other professionals.
In the long run, holding all else constant, inflation requires a decrease in the money
supply relative to the output of goods and servicesnot enough money chasing too many
By 1860, over one-half of all Southern farms utilized slave labor.
As in the modern world, price-discriminating railroad industrialists of yesteryear
charged the highest prices in markets with the steepest competition.
The percentage of people living in urban areas decreased surprisingly between 1860
and 1910.
During the 1930s, labor legislation was
(a) generally favorable to organized labor.
(b) generally unfavorable to organized labor.
(c) generally neutral with regard to organized labor.
(d) virtually the same compared to previous periods.
The English system of market overt and fairs
(a) were initially transferred to American shores where goods and services could be
bought and sold legally without an official witness
(b) flourished in the late colonial economy because of their foundation of protective
(c) replaced the rule of caveat emptor in colonial America because they covered fraud.
(d) firmly planted themselves in colonial America and continue to guide market
transactions today.
In 1820, when the nation began its westward movement in earnest, the median
American was
(a) less than 17 years old.
(b) about 20 years old.
(c) about the same age as the median American today.
(d) older than the median American today.
The Mint Act of 1792 failed to provide for a stable domestic hard currency for the U.S.
(a) the supply of gold and silver was inadequate.
(b) the federal government failed to make the coins legal tender.
(c) gold was undervalued, while silver was exported.
(d) the notes of the U.S. government were not accepted by the population because of
their low value, while the government had no gold to offer.
Once the problem of subsistence food growing had been solved, regional growth
resulted in which of the following?
(a) Balanced growth across all sectors of the economy
(b) Increased import growth and decreased export growth
(c) Developed export activity
(d) Faltering secondary industrial growth
Regarding the Interstate Commerce Commission (ICC),
(a) historians agree that it was primarily "captured" by the industry that it was supposed
to regulate.
(b) historians agree that it was primarily "captured" by passengers and shippers to the
disadvantage of the railroads.
(c) historians generally agree that it was not "captured" by any group, but rather served
the public well.
(d) historians do not "agree" on any of the above.
Which of the following was NOT a part of the American system of manufacturing?
(a) Interchangeable and standardized parts
(b) Use of indentured servants
(c) Mass production
(d) High capital intensities of production
The economist John Kenneth Galbraith (1979) lists several major sources of weakness
in the economy that laid the groundwork for the collapse of the 1930s. These sources
include all of the following except
(a) A weak banking structure
(b) Ignorance of the economy's problems by the nation's leaders
(c) An overgrown federal bureaucracy with extensive regulation of the private economy
(d) An increasingly unequal distribution of income
Extensive agricultural cultivation from 1870 to 1910, as described by Hughes and Cain
(2011), meant that
(a) there could be no increase in agricultural output per man hour.
(b) the percentage increase in acreage under cultivation and the percentage increase in
agricultural output was roughly the same.
(c) the proportion of the labor force in agriculture steadily increased.
(d) all of the above were true.
The Mint Act of 1792, following the ideas of Thomas Jefferson and Robert Morris, set
the U.S. up as
(a) a silver standard country.
(b) a paper-money country.
(c) a gold-standard country.
(d) a bimetallic country.
According to Simon Kuznet's (1958) research, the pattern of immigration in 1865"1914
(a) showed long swings but not the short-term business cycle fluctuations.
(b) showed no long swings in the 1820"1860 period, but did show the business cycle.
(c) showed both business cycle patterns and long swing patterns.
(d) unlike 1820"1860, showed neither short cycles nor long swings, but was instead
a steady surge after the Civil War ended.
Between the years 1870 and 1920, what happened to the agricultural labor force?
(a) It nearly doubled in numbers but declined significantly in its share of the total labor
(b) It remained about the same in numbers and declined significantly as a percent of the
total labor force.
(c) It nearly doubled in numbers while remaining approximately the same percentage of
the total labor force.
(d) It declined both in numbers and as a percent of the total labor force.
Historically, the U.S. governmental structure and political system
(a) changes in the presence of a system of checks and balances as
circumstances change.
(b) is a fixed structure and, therefore, provides the stability needed to
support productive activities.
(c) guarantees that only the qualified can vote.
(d) strongly protects the economic interests of capitalists identified as responsible for
economic growth.
Farmers' complaints during the post-Civil War period included all of the following
(a) High railroad rates
(b) A worsening of the terms of trade between the prices of farm goods and the prices of
manufactured articles
(c) The fact that national banks were not allowed to accept farm mortgages as loan
(d) There is no "except"; all of the above were complaints of the farmers
Federal taxes increased in 1932, 1935 and 1937, and Social Security taxes were
imposed in 1937. Which group is credited for these tax increases during the Great
(a) Classical economists
(b) Keynesian economists
(c) Monetarists
(d) Government officials and special interest groups
Bonds sales to finance World War II (1941"45)
(a) helped finance the government's current budget deficits.
(b) helped finance, manage and eventually pay down the private debts accumulated
during World War I (1914"18).
(c) were loans the U.S. government made to individuals in its private sector.
(d) led to higher interest rates and decreased private spending and investment.
The 1990s and 1920s have which of the following in common?
(a) Growth in real output, real output per person, employment and productivity
(b) Changes in the levels of nominal output, money supply and participation in
the stock market
(c) Similar expansions in the stock markets at the end of each period
(d) All of the above
Robert Fogel (1964) demonstrates that
(a) the social saving of the railroad was large; much of the country (over 25%) could
not have been settled and cultivated without the railroad.
(b) the canal and river systems of transportation could very nearly have produced the
same results as the railroad in terms of land cultivated.
(c) the railroad was responsible for a great "take-off" in terms of economic growth in
the 19th century.
(d) the railroad gave a huge boost to the iron industry because for a time it consumed
well over 50% of all iron produced.
Scholars know the national origins of Americans at the end of the colonial period
(a) the study of surnames provides the necessary information.
(b) people had to declare their country of origin when entering the colonies.
(c) tax laws required this information.
(d) an annual census provided this information.
The federal government can fund financially strained programs by
(a) Decreasing taxes
(b) Increasing funding across all programs
(c) Destroying money
(d) Issuing U.S. Treasury bonds
What is the function of the system of federal regulation created by Congress from 1887
until now?
(a) To change the outcomes of market decisions
(b) To enforce the outcomes of market decisions
(c) To replace market allocations with economic planning
(d) To enforce the law
American economic history actually is a study of
(a) stable population growth.
(b) how colonial Americans worked side-by-side with the natives to produce stable
economic growth and wealth for all individuals.
(c) how a small, inconsequential economy grew into a giant economy through a series
of successes and failures.
(d) how people in other countries created problems for colonial Americans of the past
as well as U.S. citizens of today.
The South suffered from a labor shortage immediately after the Civil War (1861"1865)
mostly because
(a) freed slaves worked fewer hours.
(b) freed slaves moved North.
(c) Southern agriculture became mechanized.
(d) Southern industry attracted workers away from agriculture.
Creative destruction includes all of the following except
(a) The rise of the automobile industry at the expense of the carriage industry
(b) The rise of the computer industry at the expense of the typewriter industry
(c) The destruction of all capital during economic busts
(d) There is no except; all of the above are examples of creative destruction
During the 20th century, U.S. death rates
(a) exhibited the same cyclical waves as birth rates.
(b) fell with advancements in healthcare and medicine.
(c) exhibited an upward trend.
(d) generally stayed flat.
The major problem with the Sherman Antitrust Act of 1890 was that
(a) it was struck down by the Supreme Court.
(b) the government lacked the tools to enforce it.
(c) its language was too vague to be applied the ways desired by Congress.
(d) businesses found ways to use the Act clearly in their favor.
In which case did the U.S. Supreme Court's review powers extend to actions by the
other two branches of the federal government and not merely to the laws of the states?
(a) Marbury v. Madison (1803)
(b) McCulloch v. Maryland (1819)
(c) Gibbons v. Ogden (1824)
(d) Dartmouth College v. Woodward (1819)
Modern union leaders are
(a) generally much more conservative than their predecessors in the late 19th and
early 20th centuries.
(b) generally more radical than their predecessors in the late 19th and early 20th
(c) neither more conservative nor more radical than their predecessors.
(d) more radical on issues such as wages and working conditions but more conservative
than their predecessors on issues such as abortion and the
In the U.S., the most recognized entrepreneurs during industrialization were
(a) clearly monopolists.
(b) robber barons, who solely realized the concentrated wealth accumulated
(c) individuals whose market power clearly originated from within the government.
(d) key individuals who were famous or wealthy.
Court rulings in the 19th century
(a) tended to favor business and profit-making activities.
(b) tended to protect traditional amenity rights of property, such as the right to clean air,
clean water, scenery and quiet enjoyment of property.
(c) tended to favor small business activities over big business corporate activities.
(d) tended to promote worker safety and ensure that employers were fully liable
for worker injuries, should they occur.
The income elasticity for cars is high. This is best illustrated by which of the following?
(a) College students buy a high percentage of the lower priced, dependable foreign cars.
(b) The purchase of all hybrid cars increases in response to the call to reduce the auto's
(c) U.S. cars built by foreign automakers sold at relatively lower prices than their equal
American counterparts.
(d) All of the above.
By the end of the colonial period in U.S. history, slaves in the colonies
(a) owned land communally.
(b) had status in courts.
(c) helped meet a labor need.
(d) were born in Europe and shipped to the colonies.
The region that was using mechanized harvesting equipment before the Civil War was
(a) the Northeast.
(b) the South.
(c) the West.
(d) the Far West.
Unlike the Federal Reserve Bank of today, the First and Second Banks
(a) could create corporations by special franchise.
(b) were generally supported by the rest of the banking community.
(c) were direct competitors with private business.
(d) provided a federal safety fund in times of well banking crisis.

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