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

Multiple Choice Questions

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

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

3. The Employment Act of 1946 dictated government's responsibility for all but the following:
(a) production
(b) purchasing power
(c) employment
(d) taxes

4. 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

5. Which of the following was not a part of the 1964 War on Poverty program?
(a) Medicare
(b) Social Security
(c) Medicaid
(d) food stamps

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

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

8. What is a good source of information on prices and markets?
(a) word of mouth
(b) a weekly magazine
(c) the Sunday paper
(d) The Wall Street Journal

9. Equality before the law refers to all but:
(a) race
(b) nationality
(c) religion
(d) innate abilities

10. The Great Depression began in:
(a) 1931
(b) 1929
(c) 1940
(d) 1934

11. Trade restrictions create:
(a) increase levels of trade
(b) a more competitive environment
(c) friction between nations
(d) a good political situation

12. The New Deal programs were not carried to their completion because of:
(a) the end of the Depression
(b) World War I
(c) the government ran out of money
(d) World War II

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

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

15. Interested sophistry refers to:
(a) a new production technique
(b) the knowledge of consumers
(c) buy cheap and selling high
(d) a new marketing tool

Short Answer Questions

1. The only kind of capital:

2. The legislation for the Federal Reserve System came into being as a result of:

3. Government expands through all but:

4. An economic contraction means all but the following:

5. Open Market Operations refers to:

(see the answer keys)

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