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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. Trade restrictions create:
(a) a more competitive environment
(b) a good political situation
(c) friction between nations
(d) increase levels of trade

2. The United States banking system is:
(a) a full reserve system
(b) a no reserve system
(c) a fractional reserve system
(d) not dependent on reserves

3. 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) only certain industries should receive protection
(d) no industries should receive protection

4. The economy functions on the basis of:
(a) voluntary cooperation
(b) command
(c) government direction
(d) orders

5. Some people support tariffs because they think that tariffs:
(a) create jobs
(b) result in increased efficiency
(c) lower prices
(d) offer protection for consumer

Short Answer Questions

1. Economic freedom refers to all but which of the following:

2. The legislation for the Federal Reserve System came into being as a result of:

3. The national security argument for protection states that:

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

5. An economic contraction means all but the following:

(see the answer key)

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