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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 4, Cradle to Grave.

Multiple Choice Questions

1. Which of the following is not a New Deal program?
(a) unemployment insurance
(b) social security
(c) public assistance
(d) Great Society

2. When the Fed sells bonds:
(a) the banks can make more loans
(b) depositors see a decline in their bank accounts
(c) the monetary reserves of the banking system decrease
(d) the economy experiences inflation

3. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:
(a) visible hand
(b) voluntary nature
(c) invisible hand
(d) command

4. The infant industry argument for protection says a:
(a) all new industries should be given protection
(b) new industry should be given protection until it matures and can compete on its own
(c) no industries should receive protection
(d) only certain industries should receive protection

5. A deposit represents:
(a) money stuffed in a mattress
(b) a liability of the individual
(c) a loan to the individual
(d) a claim against the bank

Short Answer Questions

1. The Great Depression began in:

2. Which of the following is not a function of the price system:

3. Government subsidies to industry are viewed as:

4. The economist that changed the way of economic thinking regarding depressions was:

5. What is the cause of the failure of many welfare programs?

(see the answer key)

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