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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 major welfare program in the United States is:
(a) food stamps
(b) Old Age Survivors and Dependants Insurance program
(c) Medicaid
(d) housing assistance

2. What did Alexis de Tocqueville say was the outstanding characteristic of America?
(a) liberty
(b) good incomes
(c) equality
(d) good opportunities

3. What interferes with the transmittal of information by prices?
(a) actions of sellers
(b) actions of buyers
(c) actions of manufacturers
(d) Governmental control of prices

4. Adam Smith wrote:
(a) The Price System
(b) Economic Made Simple
(c) Das Kapital
(d) The Wealth of Nations

5. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:
(a) voluntary nature
(b) invisible hand
(c) visible hand
(d) command

Short Answer Questions

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

2. An exchange rate is the:

3. An economic contraction means all but the following:

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

5. An egalitarian supports:

Short Essay Questions

1. What is the concept of the invisible hand?

2. What are the results of trade barriers?

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

4. What is the major federal welfare program in the Untied States and what are its components?

5. What is meant by equality of outcome?

6. What is the infant industry argument for protection?

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

8. What were the New Deal programs?

9. What did the Great Depression of 1929 prove to the public?

10. What are the three functions of prices?

(see the answer keys)

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