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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) Medicaid
(b) Old Age Survivors and Dependants Insurance program
(c) housing assistance
(d) food stamps

2. The command elements of every economy include things like:
(a) forbidding the purchase and sales of heroin
(b) court orders
(c) prices
(d) military conscription

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

4. Government interferes with the price system by:
(a) restraints on international trade
(b) ignoring it
(c) tariffs
(d) action fixing

5. The national security argument for protection states that:
(a) all industries should be protected
(b) industries vital to national defense should be given protection
(c) protection is not in the best national interest
(d) protection promotes national welfare

Short Answer Questions

1. Originally, in the early days of the country, equality meant:

2. The United States banking system is:

3. Which of the following is not one of Adam Smith's duties of government?

4. Which bank failure precipitated the banking crisis of 1930?

5. What is the cause of the failure of many welfare programs?

Short Essay Questions

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

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

3. What were the New Deal programs?

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

5. What is meant by equality of outcome?

6. What are the results of trade barriers?

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

8. What is the concept of the invisible hand?

9. What is meant by equality of opportunity?

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

(see the answer keys)

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