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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 2, The Tyranny of Controls.

Multiple Choice Questions

1. Protection refers to:
(a) tariffs and other trade restrictions
(b) safe production methods
(c) insurance on shipments
(d) insurance and benefits for workers

2. An exchange rate is the:
(a) the way trade barriers are established
(b) price of one currency in terms of another currency
(c) bill of lading
(d) interest rate in the foreign country

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

4. What interferes with the transmittal of information by prices?
(a) Governmental control of prices
(b) actions of buyers
(c) actions of sellers
(d) actions of manufacturers

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

Short Answer Questions

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

2. The infant industry argument for protection says a:

3. The national security argument for protection states that:

4. Prices function to transmit information to all but:

5. According to Friedman, the former Soviet economy was based on:

(see the answer key)

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