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

Multiple Choice Questions

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

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

3. Economic freedom refers to all but which of the following:
(a) ability to choose how much to spend
(b) ability to select what investments to make
(c) ability to decide what goods to purchase
(d) forced savings

4. 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

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

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

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

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

9. Which of the following is not a function of the price system:
(a) government established prices
(b) transmitting information
(c) efficient use of resources
(d) distribution of income

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

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

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

13. An exchange rate is the:
(a) bill of lading
(b) interest rate in the foreign country
(c) the way trade barriers are established
(d) price of one currency in terms of another currency

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

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

Short Answer Questions

1. An unfavorable balance of payments situation meant:

2. The higher price of pencils results in all but the following:

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

4. What kind of international trade is best?

5. What is a good source of information on prices and markets?

(see the answer keys)

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