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

Multiple Choice Questions

1. What interferes with the transmittal of information by prices?
(a) actions of manufacturers
(b) actions of sellers
(c) Governmental control of prices
(d) actions of buyers

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

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

4. Which of the following is not a problem experienced by the British National Health Service?
(a) lack of citizen interest
(b) rising costs
(c) strikes
(d) long waiting lists of patients

5. The Principle of Comparative Advantage states that a nation should specialize in:
(a) can get the highest price for
(b) has the most of
(c) all goods
(d) the production of goods in which it is relatively more efficient than the other nation

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

7. What did Alexis de Tocqueville say was the outstanding characteristic of America?
(a) liberty
(b) good incomes
(c) equality
(d) good opportunities

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

9. The only kind of capital:
(a) is only human capital
(b) is only physical capital
(c) is only financial capital
(d) are human and physical capital

10. The program that is proposed as a replacement for all welfare programs is the:
(a) free enterprise
(b) welfare benefits program
(c) cradle to grave program
(d) negative income tax program

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

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

13. The infant industry argument for protection says a:
(a) only certain industries should receive protection
(b) all new industries should be given protection
(c) no industries should receive protection
(d) new industry should be given protection until it matures and can compete on its own

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

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

Short Answer Questions

1. Open Market Operations refers to:

2. The Great Depression began in:

3. Which of the following is not a function of the price system:

4. 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:

5. Equality of outcomes is related to:

(see the answer keys)

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