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In the American colonies there was little money. England did not supply the colonies with coins and it did not allow the colonies to make their own coins, except for the Massachusetts Bay Colony, which received permission for a short period in 1652 to make several kinds of silver 5 coins. England wanted to keep money out of America as a means of controlling trade: America was forced to trade only with England if it did not have the money to buy products from other countries. The result during this pre-revolutionary period was that the colonists used various goods in place of money: beaver pelts, Indian wampum, 10 and tobacco leaves were all commonly used substitutes for money. The colonists also made use of any foreign coins they could obtain. Dutch, Spanish, French, and English coins were all in use in the American colonies. During the Revolutionary War, funds were needed to finance the war, 15 so each of the individual states and the Continental Congress issued paper money. So much of this paper money was printed that by the end of the war it was virtually worthless. As a result, trade in goods and the use of foreign coins still flourished during this period. By the time the Revolutionary War had been won by the American colonists, 21 the monetary system was in a state of total disarray. To remedy this situation, the new Constitution of the United States, approved in 1789, allowed only Congress to issue money. The individual states could no longer have their own money supply. A few years later, the Coinage Act of 1792 made the dollar the official currency of the 26 United States and put the country on a bimetallic standard. In this bimetallic system, both gold and silver were legal money, and the rate of exchange of silver to gold was fixed by the government at sixteen to one.
1. This passage mainly discusses
(A) American money from past to present
(B) the English monetary policies in colonial America
(C) the effect of the Revolution on American money
(D) the American monetary system of the seventeenth and eighteenth centuries
2. The passage indicates that during the colonial period, money was
(A) supplied by England
(B) coined freely by the colonists
(C) scarce freely by the colonists
(D) used extensively for trade
3. The Massachusetts Bay Colony was allowed to make coins
(A) continuously from the inception of the colony
(B) throughout the seventeenth century
(C) from 1652 until the Revolutionary War
(D) for a short time during one year
4. Which of the following is NOT mentioned in the passage as a substitute for money during the colonial period?
(D) Beaver furs
5. According to the passage, what happened to the American monetary system during the Revolutionary War?
(A) The Continental Congress issued gold and silver coins.
(B) Individual states were not allowed to issue money.
(C) So much paper money was circulated that it lost its value.
(D) American money replaced trade in goods and foreign coins.
6. How was the monetary system arranged in the Constitution?
(A) Only the U.S. Congress could issue money.
(B) The U.S. officially went on a bimetallic monetary system.
(C) Various state governments, including Massachusetts, could issue money.
(D) The dollar was made the official currency of the U.S.
7. According to the passage, which of the following is NOT true about the bimetallic monetary system?
(A) Either gold or silver could be used as official money.
(B) Gold could be exchanged for silver at a rate of 16 to 1.
(C) The monetary system was based on two metals.
(D) It was established in 1792.
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