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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 4, Cradle to Grave.

Multiple Choice Questions

1. According to Friedman, the former Soviet economy was based on:
(a) none of the above
(b) free markets
(c) command
(d) voluntary cooperation

2. When the Fed sells bonds:
(a) the banks can make more loans
(b) the monetary reserves of the banking system decrease
(c) the economy experiences inflation
(d) depositors see a decline in their bank accounts

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

4. Government interferes with the price system by:
(a) ignoring it
(b) action fixing
(c) tariffs
(d) restraints on international trade

5. A run on a bank occurs when depositors:
(a) depositors refuse to deposit money
(b) try to withdraw their money in cash at the same time
(c) the bank refuses to make loans
(d) depositors refuse loans

Short Answer Questions

1. After World War II government expansion was due to:

2. The Federal Reserve Act was legislated in:

3. A deposit represents:

4. The command elements of every economy include things like:

5. The Principle of Comparative Advantage states that a nation should specialize in:

(see the answer key)

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