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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 kind of international trade is best?
(a) partically free trade
(b) free trade
(c) trade with restrictions
(d) no trade

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

3. A deposit represents:
(a) a liability of the individual
(b) a loan to the individual
(c) a claim against the bank
(d) money stuffed in a mattress

4. Free international trade results in better relations between individuals who differ in all but:
(a) attitudes
(b) nationalities
(c) beliefs
(d) interests

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

Short Answer Questions

1. A run on a bank occurs when depositors:

2. The infant industry argument for protection says a:

3. What action did the Fed take after England abandoned the gold standard?

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

5. Government subsidies to industry are viewed as:

(see the answer key)

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