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

Multiple Choice Questions

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

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

3. Open Market Operations refers to:
(a) stock market operations
(b) the purchase and sale of government bonds
(c) flooding the market with junk bonds
(d) a department store sale

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

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

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

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

8. The programs of the Roosevelt administration designed to deal with the Depression are called the:
(a) financial assistance programs
(b) balanced budget programs
(c) laissez-faire programs
(d) New Deal programs

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

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

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

12. The economy functions on the basis of:
(a) orders
(b) voluntary cooperation
(c) command
(d) government direction

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

14. Government expands through all but:
(a) nationalization
(b) private enterprise
(c) regulatory activities
(d) welfare programs

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

Short Answer Questions

1. The Federal Deposit Insurance Corporation:

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

3. An economic contraction means all but the following:

4. The New Deal programs were not carried to their completion because of:

5. The purpose of urban renewal projects is to:

(see the answer keys)

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