DTW GED PREP

The economic history of the United States has been shaped by numerous significant events and developments. These events have been driven by a combination of individual actions, natural processes, social changes, and the influence of ideas. Early in U.S. history, the federal government played a limited role in economic affairs. One of the most debated economic issues was the creation of a national bank. At the urging of Alexander Hamilton, Congress established the Bank of the United States in 1791. This was a contentious decision, with figures like Thomas Jefferson opposing it on the grounds that the government had no constitutional authority to intervene in economic matters. The bank was given a 20-year charter, which expired in 1811, but the idea of government involvement in banking and finance would continue to be a topic of debate in future years.

In 1824, the Supreme Court played a pivotal role in expanding the government’s economic powers. In the case of Gibbons v. Ogden, the Court ruled that Congress had the authority to regulate interstate commerce under Article I of the Constitution. This decision clarified that Congress could regulate economic activity between states and set the stage for further government intervention in economic matters. The ruling also reinforced that states could not interfere with the use of interstate waterways and harbors, facilitating national economic integration.

The early 1800s saw a wave of westward expansion that became a significant economic event in U.S. history. The migration of settlers into the Midwest and Great Plains was driven by a surge in agricultural commodity prices and improvements in transportation that allowed farm products to reach international markets. The California Gold Rush of 1849 further accelerated westward migration, bringing wealth to many and fueling economic growth in the region.

The latter half of the 19th century was marked by the rapid development of railroads and industries such as steel and coal. The railroad industry, in particular, transformed the U.S. economy by facilitating the transportation of goods across the country and opening up new markets. However, as businesses grew, monopolies became a concern. In response, the government began to take a more active role in regulating economic activities. In 1887, the Interstate Commerce Act was passed to regulate trade across state lines and increase government oversight of railroads. Similarly, the Sherman Antitrust Act of 1890 empowered the government to break up monopolies and prevent anti-competitive practices.

The early 20th century saw the establishment of the Federal Reserve System with the Federal Reserve Act of 1913. This system was designed to stabilize the banking system and manage monetary policy. The Federal Reserve System divided the country into 12 districts, each with its own regional bank. The Federal Reserve Board oversees the system, regulates commercial banks, and implements monetary policies decided by the federal government.

The Great Depression of the 1930s was a turning point in U.S. economic history. In response to the economic collapse, President Franklin D. Roosevelt and Congress implemented the New Deal, a series of programs designed to provide relief, recovery, and reform. These programs aimed to alleviate the suffering caused by the Depression by providing financial assistance, creating jobs, and supporting large-scale infrastructure projects like dams, roads, and bridges. One of the most enduring elements of the New Deal was the creation of Social Security, which continues to provide a guaranteed income for millions of Americans today.

The economic boom that followed World War II was another transformative period. The war effort had generated massive demand for weapons, ships, and airplanes, which created millions of jobs and helped pull the economy out of the Depression. After the war, pent-up demand for consumer goods led to an economic explosion. Americans began to spend freely on homes, automobiles, and other consumer products, ushering in a period of sustained economic growth. This period, often referred to as the post-war economic boom, lasted for about 25 years and solidified the United States’ position as the world’s leading economic power.

In conclusion, the U.S. economy has been shaped by a series of key events, including the establishment of the national bank, westward expansion, industrialization, the rise of government regulation, and the response to economic crises like the Great Depression. Each of these moments played a role in defining the economic landscape of the United States and contributed to the nation’s rise as a global economic leader.

Directions: Select the most appropriate answer for each of the following questions.

1. President Roosevelt addressed the Great Depression with the New Deal, which:
   A. Discouraged economic growth in the United States.
   B. Discouraged unemployed individuals from seeking work.
   C. Provided funding for infrastructure projects such as roads and dams.
   D. Promoted buying stocks on margin.
2. What contributed to the strong economic growth at the end of World War II?
   A. A surge in housing construction.
   B. Higher consumer demand.
   C. The emergence of new industries.
   D. All of the above.

Question 3 is based on the following map:

3. What does the distribution of these banks most likely indicate?
A. Boston has a higher population than San Francisco.
B. The northeastern United States is the primary hub for banking activities in the country.
C. Banking operations are mainly concentrated in the western United States.
D. Banking practices in the Midwest are significantly different from those in the South.

4. How did economic conditions in the United States change when it entered World War II, following the Great Depression?
A. Employment rates increased.
B. Investments in new factories decreased.
C. Homeownership rates declined.
D. Savings accounts diminished.

5. In addition to a sharp rise in agricultural commodity prices, what was another factor that fueled the westward expansion beginning in 1807?
A. The search for spices
B. The pursuit of gold
C. The desire for religious freedom
D. The quest for trade routes

6. Which legislation established the modern banking system in the United States?
A. Sherman Antitrust Act
B. Interstate Commerce Act
C. Federal Reserve Act
D. The New Deal

7. What is the definition of profit?
A. Money earned over a period of time
B. Purchasing an item with the hope its value will increase
C. The point where supply equals demand
D. Income remaining after expenses are paid8. Mark an “X” next to the individuals or groups responsible for shaping the federal government’s fiscal policy.
_____ Congress
_____ President
_____ Supreme Court
_____ Secretary of Defense

1.

C. Provided funding for infrastructure projects such as roads and dams.
✅ The New Deal included large public works programs to create jobs and stimulate the economy.

2.

D. All of the above.
✅ Post-WWII economic growth was fueled by housing booms, high consumer demand, and emerging industries like electronics and aviation.

3. (Based on the map-it shows locations of Federal Reserve Banks or major banking centers)

B. The northeastern United States is the primary hub for banking activities in the country.
✅ Historically, cities like New York, Boston, and Philadelphia have been central to U.S. banking.

4.

A. Employment rates increased.
✅ The wartime economy created millions of jobs, ending the Great Depression.

5.

B. The pursuit of gold
✅ Gold discoveries, especially after 1807 (e.g., the California Gold Rush starting in 1848), were a major draw for westward migration.

6.

C. Federal Reserve Act
✅ Passed in 1913, this act created the Federal Reserve System, the central bank of the United States.

7.

D. Income remaining after expenses are paid
✅ This is the standard definition of profit in economics.

8.

Mark an “X” next to the correct answers:
✅ X Congress
✅ X President
❌ Supreme Court
❌ Secretary of Defense
👉 Fiscal policy (taxation and spending) is shaped primarily by Congress and the President.