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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

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

2. The economy functions on the basis of:
(a) orders
(b) voluntary cooperation
(c) command
(d) government direction

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

4. The purpose of urban renewal projects is to:
(a) finance the building of offices
(b) build housing projects
(c) provide low cost housing
(d) eliminate slums

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

Short Answer Questions

1. The infant industry argument for protection says a:

2. Black Thursday, October 24, 1929, refers to the:

3. The Principle of Comparative Advantage states that a nation should specialize in:

4. Governments intervene in foreign currency markets:

5. Some people support tariffs because they think that tariffs:

Short Essay Questions

1. What is meant by equality of outcome?

2. What is meant by equality of opportunity?

3. What happens if there in interference with prices?

4. How has the concept of equality changed over time?

5. What is a market failure?

6. What is the Principle of Comparative Advantage?

7. What are Open Market Operations?

8. What are the basics for the production and consumption of goods and services?

9. Which of the three kinds of equality causes a conflict with liberty?

10. What did Jefferson mean by unalienable rights?

(see the answer keys)

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