TRUE OR FALSE

1. As Smiley points out, during a depression, workers do not disappear; they are unemployed;

resources are not destroyed; they sit idle; and knowledge is not lost; it is simply not put to use.

2. The bank panic of 1907 began with a run on the Knickerbocker Trust of Chicago.

3. Initially, Federal Reserve banks were to hold 40% of member bank reserve deposits in gold

and 60% of outstanding Federal Reserve Notes.

4. Under a gold standard if there is a trade imbalance between two countries, there will be

offsetting gold flows, which in turn will affect prices until trade is once again balanced.

5. In 1914, the United States held about 26% of the world's gold stock; by 1918 that had

shrunk to about 20%

6. Realistically, Germany could only pay reparations following WWI if it could export goods to

other countries, but these countries were largely protectionist of their industries.

7. The worldwide Great Depression began in the U.S. with the stock market crash of 1929.

8. That nominal wages did not fall during the outset of the Great Depression can be ascribed

to the embracing of the "high wage" theory by President Hoover and many business owners.

9. According to Smiley, the Smoot-Hawley tariffs did not contribute to the negative effects of

the Great Depression.

10. Banks found their situations to be increasingly precarious from 1931 to 1932 in part

because the value of the bonds they were holding were falling in value.