1. The major welfare program in the United States is:
(a) food stamps
(b) housing assistance
(c) Medicaid
(d) Old Age Survivors and Dependants Insurance program

2. The words equality and liberty come from the:
(a) dictionary
(b) welfare legislation
(c) Declaration of Independence
(d) common usage

3. Adam Smith says that voluntary exchange will not take place unless:
(a) it is commanded
(b) both parties benefit from it
(c) the government can tax the transaction
(d) one party can profits

4. In regard to equality and liberty:
(a) there is a relationship between the two
(b) there is no relationship betwen the two
(c) they are two independent concepts
(d) there is a slight relationship between the two

5. The economist that changed the way of economic thinking regarding depressions was:
(a) Adam Smith
(b) Milton Friedman
(c) David Ricardo
(d) John Maynard Keynes

Short Answer Questions

1. 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:

2. Trade restrictions create:

3. Open Market Operations refers to:

4. When the Fed sells bonds:

5. The economy functions on the basis of:

(see the answer key)

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