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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. Free trade takes place when:
(a) when producers want to see a good
(b) all parties feel they can benefit
(c) when consumers want a good
(d) when one party can benefit

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

3. What functions as the central bank for the United States?
(a) the Federal Reserve System
(b) Chase Bank
(c) the Bank of the United States
(d) the Bank of England

4. 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) invisible hand
(b) command
(c) visible hand
(d) voluntary nature

5. An unfavorable balance of payments situation meant:
(a) a surplus
(b) equality of inflows and outflows
(c) nothing
(d) a deficit

Short Answer Questions

1. The Great Depression began in:

2. The term human capital refers to the:

3. What interferes with the transmittal of information by prices?

4. Governments intervene in foreign currency markets:

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

(see the answer key)

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