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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) a necessity
(c) unfair competition
(d) good economic policy

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

3. The economy functions on the basis of:
(a) orders
(b) government direction
(c) voluntary cooperation
(d) command

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

5. The command elements of every economy include things like:
(a) prices
(b) forbidding the purchase and sales of heroin
(c) military conscription
(d) court orders

Short Answer Questions

1. The infant industry argument for protection says a:

2. Economic freedom refers to all but which of the following:

3. Adam Smith says that voluntary exchange will not take place unless:

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

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

(see the answer key)

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