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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 3, The Anatomy of Crisis.

Multiple Choice Questions

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

2. A market failure occurs when:
(a) a producer finds there is no demand for his good
(b) a producer goes bankrupt
(c) an action or transaction affects third parties
(d) the production of a good is discontinued

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

4. Which of the following is not a function of the price system:
(a) transmitting information
(b) distribution of income
(c) government established prices
(d) efficient use of resources

5. Which bank failure precipitated the banking crisis of 1930?
(a) Knickerbocker Trust
(b) The Bank of the United States
(c) Bank of England
(d) Chase

Short Answer Questions

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

2. An unfavorable balance of payments situation meant:

3. Which of the following is not one of Adam Smith's duties of government?

4. The legislation for the Federal Reserve System came into being as a result of:

5. Governments intervene in foreign currency markets:

(see the answer key)

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