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

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

3. What is the cause of the failure of many welfare programs?
(a) design and implementation flaws
(b) lack of interest by the public
(c) lack of interest by the government
(d) lack of recipients

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

5. The programs of the Roosevelt administration designed to deal with the Depression are called the:
(a) laissez-faire programs
(b) balanced budget programs
(c) New Deal programs
(d) financial assistance programs

Short Answer Questions

1. Economic freedom refers to all but which of the following:

2. When the Fed sells bonds:

3. Government interferes with the price system by:

4. An unfavorable balance of payments situation meant:

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

Short Essay Questions

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

2. What are the characteristics of the Great Depression of 1929?

3. What is the Principle of Comparative Advantage?

4. Why weren't the New Deal programs carried to completion?

5. What is a market failure?

6. What happens when a nation imposes tariffs to protect domestic jobs?

7. What are Open Market Operations?

8. What is meant by equality of opportunity?

9. What are the three functions of prices?

10. What good does Friedman use as an example of voluntary exchange?

(see the answer keys)

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