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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. Governments intervene in foreign currency markets:
(a) by buying and selling domenstic and foreign currency
(b) by increasing exports
(c) by increasing imports
(d) by refusing to release currency to the market

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

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

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

5. What is a good source of information on prices and markets?
(a) The Wall Street Journal
(b) the Sunday paper
(c) a weekly magazine
(d) word of mouth

Short Answer Questions

1. The infant industry argument for protection says a:

2. The national security argument for protection states that:

3. Some people support tariffs because they think that tariffs:

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

5. What kind of international trade is best?

(see the answer key)

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