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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Children from wealthy backgrounds have better chances in education and employment. This it not representative of:
(a) equal rights
(b) equality of opportunity
(c) equality of outcomes
(d) equality before God

2. After World War II government expansion was due to:
(a) commerce
(b) finance
(c) nationalization of industry
(d) central economic planning

3. A change in prices affects all but the following:
(a) nothing
(b) incentrive to act on information
(c) wages
(d) procedures income

4. Prices function to transmit information to all but:
(a) no one in particular
(b) buyers
(c) sellers
(d) manufacturerr

5. What is the cause of the failure of many welfare programs?
(a) design and implementation flaws
(b) lack of interest by the public
(c) lack of recipients
(d) lack of interest by the government

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

7. The United States banking system is:
(a) a no reserve system
(b) a fractional reserve system
(c) not dependent on reserves
(d) a full reserve system

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

9. Which New Deal programs were declared unconstitutional?
(a) WPA and NRA
(b) Social Security
(c) AAA and WPA
(d) NRA and AAA

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

11. When did the concepts of equality before God and the law begin to come closer together?
(a) after the Revolutionary War
(b) after the Civil War
(c) after the signing of the Declaration of Independence
(d) after the ratification of the Constitution

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

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

14. After World War II there was a lot of interest in:
(a) the price system
(b) central economic planning
(c) laissez-faire capitalism
(d) imperialism

15. Free trade takes place when:
(a) when consumers want a good
(b) all parties feel they can benefit
(c) when producers want to see a good
(d) when one party can benefit

Short Answer Questions

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

2. The Great Depression began in:

3. The first head of the Federal Reserve System was:

4. An unfavorable balance of payments situation meant:

5. Economic freedom refers to all but which of the following:

(see the answer keys)

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