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

Multiple Choice Questions

1. Policies based on fair shares or 'to each according to his needs' have resulted in severe lack of liberties in all but the following:
(a) Russia
(b) China
(c) Cambodia
(d) United States

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

3. New Deal temporary programs included all but:
(a) WPA
(b) direct federal relief to the indigent
(c) medicine
(d) Civilian Conservations Corps

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

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

6. Protection refers to:
(a) safe production methods
(b) tariffs and other trade restrictions
(c) insurance and benefits for workers
(d) insurance on shipments

7. Some people support tariffs because they think that tariffs:
(a) lower prices
(b) create jobs
(c) offer protection for consumer
(d) result in increased efficiency

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

9. What functions as the central bank for the United States?
(a) Chase Bank
(b) the Bank of the United States
(c) the Federal Reserve System
(d) the Bank of England

10. Which of the following is not a public assistance program?
(a) food stamps
(b) Medicaid
(c) Aid to Families with Dependent Children
(d) Earned Income Credit

11. The equality of outcomes approach is based on:
(a) incentive
(b) contribution to output
(c) fair shares for everyone
(d) rewarding those who work hard

12. The purpose of urban renewal projects is to:
(a) build housing projects
(b) provide low cost housing
(c) finance the building of offices
(d) eliminate slums

13. Regarding the depression, Roosevelt's adviser's believed in:
(a) aggressive intervention by government
(b) no intervention in the economy
(c) waiting for the economy to heal itself
(d) a balanced budget

14. The Federal Reserve Act was legislated in:
(a) 1909
(b) 1908
(c) 1929
(d) 1913

15. The national security argument for protection states that:
(a) industries vital to national defense should be given protection
(b) protection is not in the best national interest
(c) protection promotes national welfare
(d) all industries should be protected

Short Answer Questions

1. The first thing Roosevelt did after his inauguration was to:

2. What did Alexis de Tocqueville say was the outstanding characteristic of America?

3. Enforced equality is a part of life in:

4. Equality of outcomes is related to:

5. Free markets lead to:

(see the answer keys)

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