Economic History Test #2

Front 1

True or False. In 1910, cotton textile manufacturing was the largest U.S. industry as ranked by value added.

Back 1

False

Front 2

True or False. By 1900, the U.S. was the world leader in the production of manufactured goods.

Back 2

True

Front 3

True or False. In 1900, coal was the primary source of energy for manufacturing.

Back 3

True

Front 4

True or False. Frederick Taylor argued that worker efficiency could be improved by allowing workers to form and participate in labor unions.

Back 4

False. Frederick Taylor advocated the use of incentives for superior performance, studied the movements of workers as they performed job tasks, carried on experiments to determine the optimum size and weight of tools, and developed principles pertaining to the correct routing of work and scheduling of production orders.

Front 5

True or False. In the late 19th century, most states required corporate shareholders to fully reimburse creditors if the firm could not pay its debts.

Back 5

False

Front 6

True or False. If price is less than average total cost, the firm's total revenue will equal its total cost.

Back 6

False

Front 7

True or False. Pooling by territory creates a local monopoly for each of the participating firms.

Back 7

True

Front 8

True or False. Vertical mergers allow for mass production firms to better control the flow of inputs and output.

Back 8

True

Front 9

True or False. The majority of cliometric studies conclude that monopoly power increased and competition decreased in most markets during the Reunification Period.

Back 9

False

Front 10

True or False. Under a bimetallic standard, a metal that is over-valued at the mint will not be used as money.

Back 10

False

Front 11

True or False. Commercial banks that received charters under the National Bank Act (1863) were allowed to operate branches throughout the U.S.

Back 11

False

Front 12

True or False. The clearinghouse operated by the early Federal Reserve system increased the efficiency of the commercial banking sector.

Back 12

True

Front 13

True or False. In the late 19th century, the U.S. operated on a de facto gold standard.

Back 13

True

Front 14

True or False. "Greenbacks" were a type of fiat currency created during the Civil War.

Back 14

True

Front 15

Between 1860 and 1910 output in ... expanded more rapidly than the labor force in this sector.
a. manufacturing
b. iron and steel production
c. railroad freight hauling
d. agriculture
e. all of the above

Back 15

E. all of the above

Front 16

According to your text, value added per worker in the ... industry expanded greatly in the late 19th century due to the development of standardized sizes, rotary cutting machines and reciprocating knives.
a. rubber tire
b. lumber
c. pulp and paper
d. men's clothing

Back 16

D. Men's clothing.
This happened because of the use of standardized sizes.

Front 17

The open hearth method and the Bessemer method were both used to produce steel in the late 1800s. However, the open hearth method ... the Bessemer method.
a. could be used in smaller plants than
b. was slower to be adopted than
c. was less costly than
d. took longer than
e. all of the above

Back 17

e. all of the above
I don't think this will be on the test.

Front 18

Elasticity of flour and meal was ...
a. greater than one; also greater than one.
b. less than one; also less than one
c. greater than one; less than one
d. less than one; greater than one

Back 18

b. less than one; less than one

Front 19

Mass production requires...
a. interchangeable parts and continuous flow operations
b. a perfectly elastic demand curve and a Cobb-Douglass production function
c. professional managers and centralized decision making
d. skilled labor and incentive-based wages
e. all of the baove

Back 19

a. interchangeable parts and continuous flow operations

Front 20

The McCallum management principles advocate the use of
a. time motion study to determine the most productive way to perform job-tasks.
b. employee stock-purchase programs.
c. leveraged buy-outs to increase the firm's control of an industry.
d. internal audits and employee performance reports
e. all of the above

Back 20

d. internal audit and employee performance reports

Front 21

By 1916, there were 340,000 corporations in the U.S. The growth in the number of corporations was due to
a. increased market demand
b. lower transport costs that created a national market for many goods
c. adoption by most states of administrative processes for acquiring corporate charters
d. the emergence of investment banking firms
e. all of the above

Back 21

e. all of the above

Front 22

Consider the production of a good that has a high fixed cost. As the output of this good increases, we typically find that
a. total cost falls
b. total fixed cost falls
c. average cost falls
d. marginal cost falls
e. all of the above

Back 22

c. average cost falls

Front 23

Refer to the figure on the last page of this test. In the market depicted, a monopoly will maximize profits by producing an output equal to ... and charging a price equal to ...
a. Q1; P1
b. Q2; P2
c. Q3; P3
d. Q2; P4

Back 23

b. Q2; P2

Front 24

Refer to the figure on the last page of this test. The deadweight loss due to monopoly control of this market equal to the area of ...

Back 24

The triangle between the quantity to the intersection of supply and demand.

Front 25

As a means of gaining monopoly power, holding companies were preferable to gentlemen's agreements and pooling because

Back 25

c. holding companies were legal in most states

Front 26

When a firm is operating at excess capacity, its output is ... the output associated with minimum long-run average cost.

Back 26

less than

Front 27

In the 1860's and 1870's, firms in the petroleum refining industry found that...
a. industry capacity exceeded market demand
b. the price of products they sold was falling
c. their revenues did not always cover their costs
d. their value as part of a merger could exceed their value as individual firms
e. all of the above

Back 27

e. all of the above

Front 28

In 1901, U.S. Steel was created through the ... merger of three steel firms; Carnegie Steel, National Steel and Federal Steel. Carnegie Steel had previously acquired iron ore and coal mines through ... mergers. National Steel and Federal Steel both had strong ... alliances.

Back 28

horizontal
backward vertical
forward vertical

Front 29

In U.S. v. Addyston Pipe and Steel Company, the Supreme Court ruled that

Back 29

collusive agreements among competing firms were a violation of the Sherman Act.

Front 30

In 1911, the Supreme Court ordered the dissolution of both Standard Oil Company and American Tobacco Company. In these decisions, the Court held that all of the following were grounds for antitrust violation except:
a. predatory practices that occur during a firm's growth period
b. the size of the form relative to other firms in the market
c. the use of price wars to weaken competing firms
d. the use of "kickbacks" and rebates

Back 30

the size of the form relative to other firms in the market

Front 31

The National Bank Act of 1863 included all of the following provisions except:
a. The act required national banks to hold a mandated percentage of their liabilities as reserves.
b. The act required national banks' assets to include a certain amount of U.S. treasury bonds
c. The Act established a paper currency of standardized design for use by national banks.
d. The act created a clearinghouse that could be used by any national bank.

Back 31

d. The act created a clearinghouse that could be used by any national bank.

Front 32

True or False. Following the passage of the Clayton Act, the Federal Trade Commission and the Supreme Court vigorously enforced antitrust laws and effectively discouraged the growth of large firms.

Back 32

False (which act)

Front 33

In the late 1800s, problems with the U.S. banking system included
a. an uneven distribution of notes throughout the country
b. varied banking regulation across states
c. the use of country bank reserves to support call loans made by larger urban banks.
d. the inability of the system to respond to seasonal changes in money demand
e. all of the above

Back 33

e. all of the above

Front 34

Economists often note that in a fractional reserve system, commercial banks tend to "feed booms." Thus, during a period of economic growth commercial banks tend to ... the money supply, and countercyclical monetary policy calls for a/an ... in the money supply.

Back 34

increase
decrease

Front 35

During the bank panic of 1907, many commercial banks completely suspended payment for as much as two months. This led to...

Back 35

decreases in the money supply that were followed by decreases in real output.

Front 36

What is NOT true of the Federal Reserve Act of 1913?
a. Membership in the Federal Reserve system was required for national banks.
b. State banks were not permitted to join the Federal Reserve system
c. The member banks owned the stock of the Federal Reserve district banks.
d. Member banks had to deposit cash reserves at their Federal Reserve district bank.

Back 36

b. State banks were not permitted to join the Federal Reserve system

Front 37

According to Quantity/Theory of Money, which of the following could lead to a decrease in the price level, ceteris paribus?

Back 37

an increase in real output

Front 38

True or False. The Aldrich-Vreeland Act established a potential leader of last resort for commercial banks.

Back 38

True

Front 39

True or False. During the bank panic of 1907, increases in the money supply led to decreases in real output.

Back 39

False

Front 40

True or False. After merging, the net assets of U.S. Steel were 2 times larger than the sum of the net assets of Carnegie Steel, Federal Steel, and National Steel.

Back 40

True

Front 41

True or False. Many modern management practices were first developed in the late 19th century by the railroad industry.

Back 41

True

Front 42

True or False. A firm will earn an economic loss if its average cost is less than the price of its product.

Back 42

False

Front 43

True or False. In the late 19th century, most states required corporate charters to be approved by the state's legislatures.

Back 43

False

Front 44

True or False. In 1890, the railroad system was largely double-tracked.

Back 44

False

Front 45

True or False. Value added = Total Revenue - Output

Back 45

False.
Value Added= Output-Material Cost

Front 46

In the late 19th century, firms engaged in vertical mergers in order to
a. meet increased demand for urban infrastructure
b. control the flow on inputs for mass production firms.
c. meet increased demand for processed consumer goods.
d. better manage the flow of output from mass production firms.
e. all of the above

Back 46

e. all of the above

Front 47

The horizontal merger of firms with excess capacity typically causes a/an ... in market price and a/an ... in the merged firm's long-run average cost.

Back 47

increase
decrease

Front 48

In the 1800s, options for banks faced with a severe panic included all of the following except:
a. selling bonds
b. calling in loans
c. suspending cash payments
d. obtaining a short-term loan from the central bank

Back 48

d. obtaining a short-term loan from the central bank

Front 49

In 1865, Congress raised the tax on state bank notes to 10 percent of the value of the notes in circulation. Quantitative evidence shows that by 1900,

Back 49

the number of state banks had decreased dramatically.

In the 40 years following this tax increase the number of state banks first fell, then rose.

Front 50

A ... is an agreement under which stockholders of carious, competing companies turn over their shares to a group that exercises voting control over the companies.

Back 50

trust

Front 51

In 1910, the largest U.S. industry as ranked by value added was

Back 51

machinery

Front 52

In the 1860s, ... power was more important than ... power, but by the end of the 19th century, 90 percent of manufacturing energy came from ...

Back 52

water
steam
coal

Front 53

Economists often note that in a fractional reserve system, commercial banks tend to "starve recessions." Thus, during recessions commercial banks tend to ... the money supply, and countercyclical monetary policy calls for a/an ... in the money supply.

Back 53

decrease
increase

Front 54

In the late 19th century, changes in the seasonal demand for money caused interest rates to

Back 54

increase in the fall and winter, and decrease in the spring and summer

Front 55

This statement presents accurate information about the Standard Oil merger.

Back 55

Following the merger, Standard Oil controlled 90 percent of U.S. refining capacity.

Front 56

Most cliometric studies conclude that ... during the Reunification period.
a. output of most manufactured goods rose
b. real prices for financial services decreased
c. falling transportation costs eroded local monopolies.
d. most markets were oligopolies, rather than monopolies
e. all of the above

Back 56

e. all of the above

Front 57

Alexander Field argues that the telegraph created social benefits that contributed to long-term growth because it allowed for savings on

Back 57

capital

Front 58

True or False. In the late 19th century, most states limited shareholders' losses to the value of their investment in the firm.

Back 58

True

Front 59

True or False. As Rockefeller acquired petroleum refineries in the 1870s and 1880s, he took actions that reduced industry capacity and lowered long-run average cost.

Back 59

True

Front 60

True or False. According to Alfred Chandler, strong labor unions prevented vertical integration in the 19th century cigar industry.

Back 60

False

Front 61

True or False. Most cliometric studies conclude that competition decreased in most markets during the Reunification period.

Back 61

False

Front 62

True or False. Ceteris paribus, goods with many substitutes have a more price inelastic demand.

Back 62

False

Front 63

True or False. Restrictions on interstate branch banking encouraged the growth of investment banking in the U.S.

Back 63

True

Front 64

True or False. In the late 19th century, city banks often deposited a portion of their reserves in rural country banks.

Back 64

False

Front 65

Recall our discussion of the ten largest U.S. industries by value added in 1860 and 1910. The data suggest that the income elasticity of demand for tobacco products was ...

Back 65

greater than 1

Front 66

In class, we expressed a firm's economic profit as:

Back 66

Q(P-AC)

Front 67

In the Reunification era, many manufacturing firms invested heavily in ..., which led to increases in ...

Back 67

capital; fixed costs

Front 68

Under the bimetallic standard, if the mint value (silver:gold) was 15:1 and the market value was 14:1, then

Back 68

only gold would circulate as money

Front 69

According to the Quantity Theory of Money, a decrease in M can lead to
a. a decrease in V
b. a decrease in Y
c. an increase in P
d. an increase in k
e. all of the above

Back 69

b

Front 70

The U.S. bank panic of 1907 led to all of the following except:
a. decrease in real output
b. widespread suspension of payment by commercial banks
c. purchases of bonds by the Treasury in order to increase bank reserves
d. efforts by Congress to create a lender of last resort for commercial banks

Back 70

c. purchases of bonds by the Treasury in order to increase bank reserves

Front 71

During the Civil War,
a. the U.S. had a trade deficit
b. U.S. gold reserves decreased.
c. the price in dollars of a British pound increased.
d. the U.S. price level increased more rapidly than the British price level.
e. All of the above

Back 71

e. all of the above

Front 72

Immediately following the civil war, many republicans supported a plan to ... the price level by ...

Back 72

decrease; destroying the greenbacks

Front 73

In the U.S. between 1865 and 1914, real prices for manufactured goods generally ... and output of manufactured goods generally ...

Back 73

fell
rose

Front 74

After 1874, the supply of silver ..., causing the market price of silver to become ... the U.S. mint price of silver.

Back 74

increased
less than

Front 75

The Sherman Silver Purchase Act was in effect from 1890 until 1893. During this time, people who sold silver to the U.S. treasury received treasury notes that

Back 75

the Treasury typically redeemed in gold

Front 76

A central bank typically serves as the banking system's "lender of last resort." This means that the central bank

Back 76

makes loans to banks that experience reserve shortages.

Front 77

In the 1870s, groups of firms commonly established pooling agreements based on output restrictions. However, firms also frequently cheated on these agreements by

Back 77

producing an output that was greater than the agreed-upon output.

Front 78

The late 1800s were characterized by the formation of many ..., which is when one firm owns the shares of other firms.

Back 78

holding companies

Front 79

In the U.S. after 1896,

Back 79

the price level increased

Front 80

True or False. Under the Clayton Act, practices such as price discrimination and interlocking directorates were prohibited if these practices had the effect of reducing competition.

Back 80

True

Front 81

True or False. By 1880, cigar manufacturing was a mass production industry.

Back 81

False

Front 82

True or False. At the time that Congress voted to adopt the Coinage Act in 1873, gold was over-valued at the Mint.

Back 82

True

Front 83

True or False. Western silver producers and Eastern bankers both supported reflation in the 1870s and 1880s.

Back 83

False