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

2. International trade theory is based on:
(a) the principle of comparative advantage
(b) geography
(c) the principle of absolute advantage
(d) inflows and outflows

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

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

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

Short Answer Questions

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

2. The distribution of income is determined by all but the following:

3. A tariff implemented to raise employment in the domestic nation:

4. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:

5. A market failure occurs when:

(see the answer key)

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