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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 markets lead to:
(a) less individual freedom
(b) bankruptcy
(c) economic tyrrany
(d) greater individual freedom

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

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

4. What kind of international trade is best?
(a) partically free trade
(b) trade with restrictions
(c) no trade
(d) free trade

5. Government subsidies to industry are viewed as:
(a) good economic policy
(b) unfair competition
(c) a necessity
(d) a way to increase efficiency

Short Answer Questions

1. When the Fed sells bonds:

2. A deposit represents:

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

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

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

(see the answer key)

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