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

Multiple Choice Questions

1. As a result of inflation:
(a) one dollar buys fewer goods and services
(b) one dollar buys more goods and services
(c) consumers buy more goods and services
(d) consumers feel richer

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

3. What does Friedman call one of the most successful labor unions in history?
(a) the AMA
(b) autoworkers
(c) carpenters
(d) plumbers

4. 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

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

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

7. The reason given for regulation of industry is to:
(a) force higher prices
(b) protect the consumer
(c) protect the industry from the effects of competition
(d) stabilize the industry

8. Most Western nations have experienced:
(a) no change in the size of national government
(b) laws limited the growth of government
(c) growth of national government
(d) decrease in the growth of government

9. Which of the following laws is not specifically aimed at protection of workers?
(a) workmen's compensation
(b) minimum wage legislation
(c) length of workweek
(d) Medicaid

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

11. The purpose of the EPA is to:
(a) promote safer working environments
(b) promote nicer looking neighborhoods
(c) regulate landscaping
(d) protect and enhance the environment

12. Which of the following is not a way of rationing high paying jobs:
(a) nepotism
(b) featherbedding
(c) hiring anyone
(d) corruption

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

14. What is not one of the real forces that determine the wealth of a nation?
(a) geographic area
(b) resources
(c) productivity
(d) mode of political and economic organization

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

Short Answer Questions

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

2. The Food and Drug Administration performs all of the following functions but:

3. The school voucher program would give the parents:

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

5. In Great Britain:

(see the answer keys)

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