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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. Government subsidies to industry are viewed as:
(a) a way to increase efficiency
(b) unfair competition
(c) good economic policy
(d) a necessity

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

3. A tariff implemented to raise employment in the domestic nation:
(a) lowers employment in the foreign nation
(b) benefits all workers
(c) has no effect on employment
(d) benefits all consumers

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

5. The Principle of Comparative Advantage states that a nation should specialize in:
(a) all goods
(b) has the most of
(c) can get the highest price for
(d) the production of goods in which it is relatively more efficient than the other nation

Short Answer Questions

1. The infant industry argument for protection says a:

2. The national security argument for protection states that:

3. 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:

4. Trade restrictions create:

5. The only kind of capital:

(see the answer key)

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