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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. The term human capital refers to the:
(a) output produced by a fasting
(b) personal productive capacity of an individual
(c) kinds of inputs the worker uses
(d) machinery in the factory

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

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

4. The only kind of capital:
(a) is only financial capital
(b) is only physical capital
(c) are human and physical capital
(d) is only human capital

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

Short Answer Questions

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

2. Free markets lead to:

3. A market failure occurs when:

4. Black Thursday, October 24, 1929, refers to the:

5. Government subsidies to industry are viewed as:

(see the answer key)

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