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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. Adam Smith wrote:
(a) Economic Made Simple
(b) Das Kapital
(c) The Wealth of Nations
(d) The Price System

2. Trade restrictions create:
(a) a more competitive environment
(b) increase levels of trade
(c) a good political situation
(d) friction between nations

3. The Federal Deposit Insurance Corporation:
(a) provides mortgage insurance for homeowners
(b) guarantees deposits against a loss up to a stated amount
(c) guarantees the repayment of bank loans
(d) guarantees the full amount of all deposits against loss

4. The Great Depression began in:
(a) 1934
(b) 1940
(c) 1931
(d) 1929

5. International trade theory is based on:
(a) the principle of comparative advantage
(b) geography
(c) the principle of absolute advantage
(d) inflows and outflows

Short Answer Questions

1. Open Market Operations refers to:

2. An economic contraction means all but the following:

3. A run on a bank occurs when depositors:

4. A coordinated restriction of payments by banks is used:

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:

(see the answer key)

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