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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. An economic contraction means all but the following:
(a) increased output
(b) decreased output
(c) unemployment
(d) lower levels of income

2. Economic freedom refers to all but which of the following:
(a) ability to decide what goods to purchase
(b) forced savings
(c) ability to choose how much to spend
(d) ability to select what investments to make

3. Adam Smith says that voluntary exchange will not take place unless:
(a) the government can tax the transaction
(b) it is commanded
(c) both parties benefit from it
(d) one party can profits

4. Prices function to transmit information to all but:
(a) sellers
(b) buyers
(c) no one in particular
(d) manufacturerr

5. According to Friedman, the former Soviet economy was based on:
(a) none of the above
(b) voluntary cooperation
(c) command
(d) free markets

Short Answer Questions

1. Government interferes with the price system by:

2. The Principle of Comparative Advantage states that a nation should specialize in:

3. The distribution of income is determined by all but the following:

4. The command elements of every economy include things like:

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

(see the answer key)

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