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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) eliminate slums
(d) build housing projects

2. Trade restrictions create:
(a) friction between nations
(b) increase levels of trade
(c) a more competitive environment
(d) a good political situation

3. After World War II there was a lot of interest in:
(a) central economic planning
(b) the price system
(c) laissez-faire capitalism
(d) imperialism

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

5. An economic contraction means all but the following:
(a) lower levels of income
(b) decreased output
(c) unemployment
(d) increased output

Short Answer Questions

1. The Federal Reserve Act was legislated in:

2. The economy functions on the basis of:

3. What action did the Fed take after England abandoned the gold standard?

4. Children from wealthy backgrounds have better chances in education and employment. This it not representative of:

5. Government measures to promote fair shares for all:

Short Essay Questions

1. Why was the Federal Reserve System formed?

2. What is meant by equality of opportunity?

3. What were the New Deal programs?

4. What is the concept of the invisible hand?

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

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

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

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

9. What is a market failure?

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

(see the answer keys)

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