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

Multiple Choice Questions

1. The Department of Energy was formed in response to the:
(a) series of energy crises in the 1970s
(b) formation of OPEC
(c) the need for oil
(d) to produce oil

2. Wages increasing faster than productivity is:
(a) a result of inflation
(b) a cause of inflation
(c) the result of poor equipment
(d) none of the above

3. Barter:
(a) is the exchange of money for goods and services
(b) is the exchange of one good or service for another good or service
(c) establishes the value of money
(d) is the exchange ratio of money

4. The growth of bureaucracy leads to:
(a) a conflict between desired objectives
(b) greater efficiency
(c) lower costs
(d) faster resolution of problems

5. New drugs cannot be marketed:
(a) the drug company can produce them cheaply
(b) unless the FDA determines they are safe and effective
(c) their profitability is proven
(d) until the drug manufacturer approves them

6. Union high wages are usually at the expense of:
(a) other workers
(b) other union members
(c) no one
(d) all workers

7. In Great Britain:
(a) workers represent themselves
(b) most labor unions represent workers of nationalized industry
(c) there are no labor unions
(d) labor unions are weak

8. Who would benefit the most from an increased quality of schooling from a school voucher program?
(a) the upper income classes
(b) all income classes would benefit equally
(c) lower income classes
(d) the middle income classes

9. Friedman favors:
(a) bigger government
(b) more government controls
(c) limiting the growth of government
(d) expanding the scope of government

10. Most of the ICC staff came from the:
(a) legislature
(b) were laymen
(c) railroad industry
(d) stock market

11. Friedman suggests constitutional amendments to limit government in all but the following areas:
(a) wage and price controls
(b) international trade
(c) qualificaiton of bureaucrats
(d) occupational licensure

12. In the mid-nineteenth century, the intellectual beliefs favored:
(a) government control of the economy
(b) free trade and private enterprise
(c) public ownership
(d) limited international trade

13. As a result of inflation, there is:
(a) no change in prices
(b) an increase in prices
(c) decrease in prices
(d) more goods and services to buy

14. Which of the following is not a method of unions securing higher wages?
(a) enforcing a higher wage
(b) the free market
(c) collusion with the employer
(d) restricting jobs

15. The Environmental Protection Agency was formed in:
(a) 1972
(b) 1970
(c) 1966
(d) 1975

Short Answer Questions

1. In the inner city schools, much of the money goes for all but the following:

2. According to Friedman, the way to cure inflation is to:

3. In Virginia in the 1600s, what functioned as money?

4. Which kind of worker has no protection?

5. According to Friedman, who is most likely to produce a shoddy product?

(see the answer keys)

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