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

Multiple Choice Questions

1. Equality before God means:
(a) the right to an equal income
(b) personal equality
(c) the right to do whatever one wants
(d) total freedom

2. An economic contraction means all but the following:
(a) decreased output
(b) unemployment
(c) increased output
(d) lower levels of income

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

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

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

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

7. Government subsidies to industry are viewed as:
(a) unfair competition
(b) a way to increase efficiency
(c) good economic policy
(d) a necessity

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

9. A deposit represents:
(a) a liability of the individual
(b) a loan to the individual
(c) a claim against the bank
(d) money stuffed in a mattress

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

11. Black Thursday, October 24, 1929, refers to the:
(a) end of the gold standard
(b) end of government payments
(c) collapse of the banking system
(d) collapse of the stock market

12. Government measures to promote fair shares for all:
(a) reduce liberty
(b) have no affefct on liberty
(c) create harmony
(d) enhance liberty

13. Which bank failure precipitated the banking crisis of 1930?
(a) Bank of England
(b) The Bank of the United States
(c) Chase
(d) Knickerbocker Trust

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

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

Short Answer Questions

1. Equality before the law refers to all but:

2. In regard to equality and liberty:

3. International trade theory is based on:

4. Originally, in the early days of the country, equality meant:

5. The Employment Act of 1946 dictated government's responsibility for all but the following:

(see the answer keys)

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