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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. After World War II government expansion was due to:
(a) commerce
(b) nationalization of industry
(c) finance
(d) central economic planning

2. Some people support tariffs because they think that tariffs:
(a) lower prices
(b) offer protection for consumer
(c) result in increased efficiency
(d) create jobs

3. A coordinated restriction of payments by banks is used:
(a) faster a monetary expansion
(b) to stop a run on banks
(c) meet the public's demands for currency
(d) intensify a run on banks

4. A change in prices affects all but the following:
(a) wages
(b) nothing
(c) procedures income
(d) incentrive to act on information

5. Free markets lead to:
(a) economic tyrrany
(b) bankruptcy
(c) less individual freedom
(d) greater individual freedom

Short Answer Questions

1. Free international trade results in better relations between individuals who differ in all but:

2. Restrictions of payments refers to:

3. The Great Depression began in:

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

5. What is a good source of information on prices and markets?

Short Essay Questions

1. What is meant by equality of outcome?

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

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

4. What were the New Deal programs?

5. What is the concept of the invisible hand?

6. What is meant by equality of opportunity?

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

8. Which two New Deal programs were declared unconstitutional?

9. Why are subsidies considered to be a form of unfair competition?

10. What is the Principle of Comparative Advantage?

(see the answer keys)

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