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

2. Protection refers to:
(a) tariffs and other trade restrictions
(b) safe production methods
(c) insurance on shipments
(d) insurance and benefits for workers

3. Some people support tariffs because they think that tariffs:
(a) offer protection for consumer
(b) lower prices
(c) result in increased efficiency
(d) create jobs

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

5. 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:
(a) invisible hand
(b) visible hand
(c) voluntary nature
(d) command

Short Answer Questions

1. International trade theory is based on:

2. The higher price of pencils results in all but the following:

3. Open Market Operations refers to:

4. Free international trade results in better relations between individuals who differ in all but:

5. Governments intervene in foreign currency markets:

(see the answer key)

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