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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 3, The Anatomy of Crisis.

Multiple Choice Questions

1. The national security argument for protection states that:
(a) protection promotes national welfare
(b) protection is not in the best national interest
(c) industries vital to national defense should be given protection
(d) all industries should be protected

2. The Federal Deposit Insurance Corporation:
(a) guarantees the full amount of all deposits against loss
(b) provides mortgage insurance for homeowners
(c) guarantees the repayment of bank loans
(d) guarantees deposits against a loss up to a stated amount

3. A change in prices affects all but the following:
(a) wages
(b) incentrive to act on information
(c) procedures income
(d) nothing

4. What interferes with the transmittal of information by prices?
(a) actions of buyers
(b) actions of manufacturers
(c) Governmental control of prices
(d) actions of sellers

5. International trade theory is based on:
(a) inflows and outflows
(b) the principle of comparative advantage
(c) geography
(d) the principle of absolute advantage

Short Answer Questions

1. Some people support tariffs because they think that tariffs:

2. Adam Smith says that voluntary exchange will not take place unless:

3. According to Friedman, the former Soviet economy was based on:

4. A run on a bank occurs when depositors:

5. Adam Smith wrote:

(see the answer key)

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