One way to characterize technological change is “creative destruction,” which basically
means that today’s innovation will productively destroy yesterday’s capital investment.
This destruction creates new job opportunities, boosts production and offers a greater
variety or more goods and services than in the past.
Consumers of most goods usually experience diminished satisfaction in each additional
unit consumed. However, when variety appears endless, this may not be the case.
Consider manufactured goods between 1890 and 1910.
Contrary to Populist views, the lending practices during industrialization provided
ample opportunities for firms and agriculturalists to invest, grow and develop.
Sharecropping after the Civil War (1861″1865) was the land tenure of black and white
non-landowning farmers in about equal proportions.
Charging “what the traffic will bear” was a tactic commonly pursued by American
railroads before they were subjected to regulation.
The need to issue paper money increased with the frequent use of checks.
The Social Security System of 1935 was flawed from the beginning. It left old-age
pensions in the control of the states. Two examples include workers’ and unemployment
compensation.
During the period of industrialization in the U.S., real income in the agricultural sector
fell.
Since wages fell by more than prices, Civil War laborers were better off.
The decision to give the politically appointed members of the Federal Reserve Board an
automatic majority weakened the power of the private sector in the determination of
monetary policy.
According to Fishlow’s (1972) work, the U.S. railroads before the Civil War were
typically built “ahead of demand” by private capital.
Barry Eichengreen (1992) blamed the severity of the worldwide depression from 1929
to 1933 on the countries who abandoned the rules of the gold standard during economic
downturns. This abandonment relieved countries from the monetary discipline measures
of the gold standard.
The Sherman Antitrust Act of 1890 was followed almost immediately in the 1890s by
the largest merger movement ever known by Americans up to that point in U.S. history.
The fee simple form of land ownership in the United States was of English origin.
Rational slave owners had economic incentive to adequately clothe, feed and care for
their slaves.
At the start of the Civil War, the population in the U.S. was about half that of the United
Kingdom.
At one time, people living in the U.S. were imprisoned or fined for not having
legitimate work.
A decrease in the demand for unskilled and skilled labor was a secondary effect of the
productive use of fractional horsepower and internal combustion engines.
According to Hughes and Cain (2011), taxation can be a form of forcible seizure of
property, under certain circumstances.
The proportion of Southern farms relying on slaves rose between 1840 and 1860. Plus,
the scale economies of slavery aggravated the chronic shortage of good Southern
farmland.
The U.S. had a low fertility rate in the early nineteenth century.
Unemployment in 1939, after a decade of recession and depression, still exceeded 10
percent.
Compared to other countries, the U.S. government is very concerned with intellectual
property rights. This can explain, in part, the success of its software, computer and other
electronic industries.
A bill of exchange necessitated the use of coin and bullion and thus restricted the
growth of commercial trade.
Fifty-five delegates from seven states convened at the first Constitutional Convention
(1787) to determine whether the central government of the new, independent country
should modify its rules and regulations to permit more or less state sovereignty.
Under the gold standard of the Great Depression, any country experiencing a balance of
payment deficit was expected to finance those deficits by exporting gold. The loss of
gold should be followed by contractionary monetary policy, reducing demand and
causing prices to fall. All countries operating under the gold standard followed these
rules of the game throughout the Great Depression.
Public funding is not a part of colonial history.
Private investment spending escalated during the post-World War II era (1945″50).
Goldin (2001) refers to the 20th century as the “human capital” century and credits
education for the rise in overall income.
Monopolist fears that central banks would unfairly compete with all other
profit-maximizing banks contributed to the demise of the First and Second Banks of the
U.S.
Local, state and federal government control and influence over businesses through
taxes, subsidies, licensing and inspections are a firm part of U.S. history.
Taxes impact incentives to use resources since they distort relative prices.
Western agriculture in the nineteenth century can be characterized by
(a) a rising labor to output ratio.
(b) a rising capital to output ratio.
(c) the use of marginal land to increase output.
(d) a shift to more efficient crops.
According to Hughes and Cain (2011), after the Civil War (1861″1865) the freed slaves
were
(a) left to fend for themselves without property, money or skills.
(b) provided with 40 acres and a mule to get a start in life as free people.
(c) provided with some monetary compensation for the centuries-long oppression and
exploitation they and their ancestors had faced.
(d) able to quickly become successful farmers and craftsmen.
According to the theory of money, what is the most compelling evidence to use against
those researchers or historians who believe that England was responsible for creating a
shortage of money in colonial America?
(a) Colonial growth in commerce and trade proceeded.
(b) The colonists paid moderate rates of interest.
(c) Investment in colonial America occurred.
(d) Prices increased, rather than decreasing.
Fogel (1964) came up with two estimates of social savings ( and ). What do they
represent?
(a) The level of industrial productivity using railroads and the level not using railroads
(b) The lowered benefit of transport for agricultural goods using railroads and the
lowered benefit of transport for all goods and passengers using railroads
(c) The lower output of the U.S. economy using transportation financed through
domestic capital and foreign capital
(d) The cost of shipping goods by railroads and the cost of shipping by waterways and
wagon transport
Slaves were expensive factors of production in comparison to free labor. Which of the
following was not a cost to slave labor?
(a) Food
(b) Clothing
(c) Wages
(d) Medical care
Which of the following threatens the future of the U.S. economy?
(a) A strengthening of private property rights
(b) Effectively preventing some individuals and organizations from
pursuing noncompetitive market legislation
(c) Racism, discrimination and sexism
(d) Increased private consumption and investment and reduced
government expenditures
On the gold standard, a trade deficit in the U.S. impacted the economy by producing
(a) a gain of specie.
(b) a tight supply of money.
(c) low interest rates.
(d) deflation.
The long-term impact of Munn v Illinois (1877) on regulatory efforts was
(a) to hold back federal efforts to regulate business.
(b) to prevent states from regulating interstate trade.
(c) to provide a temporary justification for regulating business.
(d) to establish government as able to regulate all businesses permanently.
Regarding the stock market crash of 1929, evidence shows that
(a) no one expected trouble in the stock market before the October 1929 crash.
(b) there was doubt about the speculative heights of stock prices as they continued
to rise and more money continued to pour into the market.
(c) only active support by the New York Federal Reserve Bank during the summer
and fall of 1929 enabled the bull market to last until October.
(d) investment trusts and nonbanking money sources correctly anticipated the
downturn.
Which transportation industry did government invest most heavily in before 1860?
(a) Turnpikes
(b) Canals
(c) River steamboats
(d) Railroads
The U.S. economy remains subject to frequent boom and bust cycles. Throughout U.S.
history, policymakers after the Great Depression often
(a) raise or lower taxes and spending to adjust aggregate demand and thereby smooth
the business cycle.
(b) take a hands-off approach to the business cycle.
(c) consult with world organizations on how to address cyclic fluctuations.
(d) close economies to international trade.
Railroads
(a) were among the last of the pre-1890 big businesses to be regulated.
(b) were only subject to regulation by governments when the federal government
stepped in with the Interstate Commerce Act of 1887.
(c) were objects of regulation more than a decade before the Interstate Commerce
Commission Act.
(d) were never subject to government regulation before World War I and the “command
economy.”
In 1933 the unemployment rate was about 25%. This percentage
(a) is probably quite accurate because the data on unemployment collected by the
federal government was quite good at the time.
(b) is probably too high because some people with jobs claimed to be unemployed
so that they could collect unemployment compensation payments.
(c) is probably too low because there were discouraged and underemployed workers.
(d) is probably meaningless because the data on unemployment was either very poor or
nonexistent.
During the antebellum period, most international payments were made by
(a) shipping specie.
(b) bills of exchange.
(c) credit extended by private banks in the U.S.
(d) all of the above.
Which of the following best describes typical employer attitudes toward organized
labor (unions) during the 19th century?
(a) Positiveunions could promote cooperation with management to achieve more
efficient operations
(b) Negativeunion-promoted labor gains seized profits and encouraged inefficient
behavior
(c) Indifferentunions had little impact on business profitability
(d) Mixedabout half of employers favored unions and half opposed them
The appearance of “classical American capitalism” in the middle and late 19th century
includes all of the following except
(a) An industrial labor force concentrated in manufacturing centers
(b) The commercialization of agriculture and extractive industries
(c) The rise of big-time finance and giant transportation systems
(d) The strengthening of small scale family farm enterprises and hand-crafted
production activities
The rule of caveat emptor
(a) is the supreme rule throughout our economy today.
(b) still exists, but only outside of the extensive framework of government regulations
of business.
(c) is essentially the only rule with regard to buying and selling in our economy that is
consistent with the concepts of freedom and liberty enshrined in our Constitution.
(d) is of little importance in our economy today.
Growth in real output per person occurred, on average, in colonial America. This
growth translated into a great improvement in the quality of life for all citizens.
Which of the following occurred during the 20th century?
(a) The total U.S. population increased.
(b) The percentage of foreign-born residents decreased, on average.
(c) The median age fell.
(d) All of the above occurred during the 20th century.
The persistent problem of inflation, beginning in the late 1960s, had its causes in all of
the following except
(a) The full-scale entrance of the United States into the Vietnam War in 1965
(b) “Oil shocks” in the 1970s
(c) Rising production costs in almost every sector in the economy due to rising energy
costs
(d) Rising corporate taxes which raised the cost of doing business
All but which of the following people supplied labor in colonial America?
(a) Members of the free population in England and other parts of Northern Europe.
(b) Native Americans
(c) Slaves
(d) Indentured servants
Speculation in the sale of public lands
(a) did not occur.
(b) placed land in the hands of capitalists at a price that was not competitive.
(c) proved to be a necessary evil in transferring land from public to private ownership.
(d) was caused by squatters.
The main source of conflict between employers and their organized workers is over the
(a) disparities in the wages and benefits between organized and unorganized labor.
(b) disparities in the wages and benefits between employers and organized workers.
(c) proceeds of selling goods and services made jointly between hired labor
and business owners.
(d) working conditions.
According to the Thomas (1954) analysis, American investment in industrial physical
capital was
(a) labor-using in upswings of immigration.
(b) labor-saving in upswings of immigration.
(c) “labor neutral” over the course of immigration.
(d) relentlessly labor-saving no matter what.
The implementation of new technology can be quick throughout the world if
(a) patent rights are leased and purchased.
(b) unions are strong.
(c) economies are closed to foreign competition.
(d) tariffs are placed on those imported goods and services benefiting from the
technological advancements in the rest of the world.
During the years prior to the Great Depression (the 1920s), farmers were
(a) experiencing an increase in the value of farm output.
(b) enjoying rising incomes and prosperity in spite of interest charges and taxes on real
estate.
(c) experiencing stagnant incomes.
(d) experiencing declining incomes and hard times.
Unions add costs to labor. Who ultimately absorbs the costs?
(a) The employer
(b) The union worker
(c) The unorganized laborer
(d) The consumer
The wartime demand for manufacturing goods directly impacted the economy in which
of the following ways?
(a) Increased demand for factory workers
(b) Increased demand for imported goods
(c) Decreased demand for agricultural goods
(d) All of the above
In Nebbia v New York (1934), the doctrine of Munn v Illinois (1877)
(a) was held to be irrelevant.
(b) was upheld for all cases.
(c) was upheld for interstate commerce.
(d) was overturned explicitly.
Industrialization in advanced economies suggests that rising productivity is responsible
for
(a) a drop in the number of laborers employed in the primary sector.
(b) a smaller percentage of the total labor force working in the secondary sector.
(c) a significant rise in the number of people working in the tertiary sector.
(d) all of the above.
The Bank Act of 1935 restructured the Federal Reserve System (FRS) in which of the
following ways?
(a) The FRS Board of Governors gained discretionary control over bank reserves and
margin requirements for loans against securities.
(b) The Governor’s Committee was renamed the Federal Open Market which was
comprised of 12 members, 7 of whom were governors on the FRS Board.
(c) The secretary of the U.S. Treasury and comptroller of currency were removed from
the FRS Board.
(d) All of the above
Research indicates that which one of the following factors likely gave rise to increased
obesity in the U.S.?
(a) Advancements in modern cooking technology
(b) Increased consumption of restaurant and fatty foods
(c) A shift from exercise in leisure to labor
(d) All of the above
Western expansion contributed to U.S. growth and development of the economy by
(a) privately mobilizing idle natural resources and land.
(b) placing land in the hands of the public, with no private rights.
(c) having government officials set land prices.
(d) all of the above.
All of the following are true of the gold standard except
(a) It requires international trading partners to strictly accept gold payments for imports
and exports
(b) It supported stable and fixed exchange rates throughout most of the 19th century
(c) It encouraged international trade
(d) It integrated the U.S. monetary system into the world market