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

Multiple Choice Questions

1. In what ways does competition protect the consumer?
(a) consumers will not continually buy shoddy products
(b) by advertising
(c) through the honesty of sellers
(d) by the information provided with the product

2. In Great Britain, the post World War II trend has been toward:
(a) Fabian socialism and New Deal liberalism
(b) Communism
(c) laissez-faire
(d) liberal capitalism

3. The minimum wage causes:
(a) unemployment
(b) higher employment levels
(c) no effect on employment levels
(d) social unrest

4. In the inner city schools, much of the money goes for all but the following:
(a) repairing damages from vandalism
(b) preventing vandalism
(c) maintaining discipline
(d) education

5. Where have labor unions been stronger than they are in the United States?
(a) Great Britain
(b) Germany
(c) France
(d) Spain

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

7. What items have not functioned as money over time:
(a) Cowrie shells
(b) metals
(c) beads
(d) dirt

8. What do higher union wages cause?
(a) more jobs
(b) no change in prices
(c) lower prices
(d) higher prices

9. To improve their position, railroads engaged in:
(a) good service
(b) intensive advertising
(c) promotions
(d) rate fixing

10. During a hyperinflation:
(a) wages increase faster than prices
(b) none of the above
(c) prices fail quickly
(d) prices may double during a day

11. According to Friedman, the way to cure inflation is to:
(a) reduce the rate of monetary growth
(b) limit the amount of goods and services available for sale
(c) promote spending policies
(d) force consumers to increase their savings

12. In terms of goods, the price of money:
(a) is the reciprocal of the price of goods in terms of money
(b) equal to the price of the good
(c) not possible to determine
(d) is one third the price of goods

13. In Virginia in the 1600s, what functioned as money?
(a) gold
(b) wampum
(c) beads
(d) tobacco

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

15. A school voucher program would:
(a) have no effect on taxes paid
(b) raise taxes
(c) increase the costs of education
(d) lower taxes

Short Answer Questions

1. In the 1920s, what publications were the leading intellectual journals of opinion?

2. In Western nations, when a government doesn't achieve its economic goals:

3. The amount of time from the increase in the quantity of money and the rise in prices is about:

4. All but the following are functions of the CPSC:

5. Printing new money to increase the quantity of money is:

(see the answer keys)

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