Chapter 7
Hard Realities for a New Nation
General Questions
1.What method was most used by the U.S. federal government to fund the Revolutionary War?
a.increased taxes
b.increased the money supply
c.borrowed more money
d.increased tariffs
2.The Continental Congress faced several constraints in its effort to finance the Revolutionary War. The largest source of funds for the war was
a.excise taxes.
b.domestic bond sales.
c.borrowing from foreign powers, such as France.
d.printing money.
- The hyperinflation of the Revolutionary War period
a.persisted throughout the 19th century because of over-issue of paper money by the states.
b.has been exaggerated; prices were, in fact, quite moderate during the war.
c.was severe, but short-lived; prices returned to normal levels following the war.
d.was accelerated by the repudiation of most wartime-issued paper money following the war.
4.Which of the following responsibilities did the Constitution not give to the federal government?
a.the right to set a common foreign policy
b.the sole right to mint coins
c.the right to regulate trade between states
d.the right to tax income
5.Which of the following most accurately and completely describes the responsibilities the Constitution gave to the federal government?
a.the authority to provide for copyrights and patents
b.the right to tax income
c.the authority to regulate interstate commerce
d.both a and c
6.The Constitution
a.empowers each state to negotiate its own treaties with foreign governments.
b.empowers Congress to pay off all public debts, including those incurred by the states.
c.allows for states to set tariffs on goods imported from another state.
d.allows only Congress to set tariffs on goods moving from one state to another.
7.What generated the most revenue for the U.S. government in the first 20 years after the Revolution?
a.income taxes
b.property taxes
c.tariffs on goods imported from other nations
d.inheritance taxes
e.taxes on products shipped between states
8.What was not one of the problems of the Articles of Confederation?
a.It did not allow the federal government to tax.
b.It did not give the federal government sufficient power to define international relationships.
c.It could not keep the states together as a political union.
d.It did not give the federal government the sole right to mint coins.
9.For the United States, the Revolutionary War (1775-1781) period could best described as having a rapid growth in
a.trade.
b.inflation.
c.real per capita income.
d.slave imports.
10.What was not one of the Constitutional compromises about slavery?
a.It limited the importation of slaves to 20 years.
b.Northern states had to abide by the Southern states’ slavery laws.
c.It prevented imported slaves from being taxed.
d.Slaves counted as 60 percent of a person for congressional representation.
11.The economic system envisioned by the Constitution
a.embodied Adam Smith’s emphasis on protecting private property.
b.used the Civil Code of France, rather than the English Common Law, as its foundation.
c.enshrined the traditional 18th century model of mercantilism, which allowed the government to have large control over private ownership of goods and services.
d.fostered Jefferson's idea of a democracy based primarily on agriculture.
12.During the Revolutionary War, the U.S. trade deficit increased because U.S.
a.imports decreased, while U.S. exports increased.
b.imports increased, while U.S. exports decreased.
c.exports decreased more than U.S. imports decreased.
d.imports decreased more than U.S. exports decreased.
- Post-Revolutionary trade data show that after 1790
a.U.S. trade with non-British areas of the Caribbean increased.
b.the export of food to the West Indies increased.
c.trade in the southern United States did not keep pace with population growth.
d.the United States exported tobacco to France and the Netherlands.
e.all of the above occurred.
- The Napoleonic Wars (1793-1815)
a.were financially devastating to the United States.
b.allowed American shippers to profit through re-exports.
c.ended America’s trade with the West Indies.
d.forced the United States to develop an early version of the Coast Guard.
- The Embargo Act (1807)
a.provided some aid to the emerging manufacturing sector in the United States.
b.successfully forced England and France to ease their harassment of neutral ships.
c.reduced U.S. imports, but increased U.S. exports.
d.remained in effect until after the Civil War.
e.All of the above are true.
Economic Insights
1.In 1774 the best estimate for the size of the overseas trade as a proportion of national income is
a.0 to 5 percent.
b.15 to 20 percent.
c.about 50 percent.
d.70 to 75 percent.
2.When the colonies obtained independence they were no longer bound by a number of English laws, including the Navigation Acts. What best describes the impact of the removal of the Navigation Acts for commodities that were imported from Europe via England?
a.A shift out of the supply curve and a shift back in the demand curve, which lowered prices.
b.A shift out in the supply curve, which decreased the price and increased the quantity.
c.A shift back in both the supply and demand curves, which decreased quantity.
d.A shift back in the demand curve, which lowered both price and quantity.
Economic Analysis
1.If a the price index was 50 in 1998 and the price index was 70 in 1999, the best estimate of the annual inflation rate between 1998 and 1999 is
a.20 percent.
b.40 percent.
c.50 percent.
d.70 percent.
e.7/5.
2.The United States terminated its role in the slave trade in the early 1800s. What is the best assessment of what would have happened had the United States not ended the slave trade?
a.The price of slaves would be lower and the wages of free workers would be lower.
b.The price of slaves would be higher and the quantity of free workers would be lower.
c.The price of slaves would be lower and the wages of free workers would be higher.
d.The quantity of slaves would be higher and the quantity of free workers would be higher.
e.The quantity of slaves would be lower and the wages of free workers would be lower.
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