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

Multiple Choice Questions

1. A coordinated restriction of payments by banks is used:
(a) to stop a run on banks
(b) intensify a run on banks
(c) meet the public's demands for currency
(d) faster a monetary expansion

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

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

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

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

6. Policies based on fair shares or 'to each according to his needs' have resulted in severe lack of liberties in all but the following:
(a) Cambodia
(b) United States
(c) China
(d) Russia

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

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

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

10. The command elements of every economy include things like:
(a) prices
(b) court orders
(c) military conscription
(d) forbidding the purchase and sales of heroin

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

12. The legislation for the Federal Reserve System came into being as a result of:
(a) the collapse of the stock market
(b) public works programs
(c) the Great Depression of 1909
(d) runs on banks

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

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

15. The Federal Deposit Insurance Corporation:
(a) provides mortgage insurance for homeowners
(b) guarantees deposits against a loss up to a stated amount
(c) guarantees the full amount of all deposits against loss
(d) guarantees the repayment of bank loans

Short Answer Questions

1. International trade theory is based on:

2. The programs of the Roosevelt administration designed to deal with the Depression are called the:

3. Which bank failure precipitated the banking crisis of 1930?

4. Which of the following is not one of Adam Smith's duties of government?

5. What functions as the central bank for the United States?

(see the answer keys)

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