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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Which commodity is more susceptible to price variations?
(a) Wool.
(b) Gold.
(c) Corn.
(d) Linen.

2. What is a common characteristic for a workman under division of labor?
(a) Every workman is equal to every other workman.
(b) Every workman has the means to improve himself.
(c) Every workman has increased purchasing power.
(d) Every workman produces more than he needs.

3. What happens when the demand of a commodity is larger than the supply?
(a) The commodity is sold out.
(b) The price falls.
(c) More goods are brought in.
(d) The price rises.

4. What happens in every country that employs an increase in stock?
(a) The same quantity of industry produces a lesser quantity of work.
(b) The lesser quantity of industry produces produces a greater quantity of work.
(c) The same quantity of industry produces a greater quantity of work.
(d) The greater quantity of industry produces a greater quantity of work.

5. What kind of business does not lend itself to many subdivisions of labor?
(a) Textile manufacturing.
(b) Ship building.
(c) Foundry.
(d) Agriculture.

6. What kind of commodity must be sold quickly?
(a) Those with abundance of supply.
(b) Those no longer wanted.
(c) Those which will not endure.
(d) Those in short supply.

7. What is the actual price at which any commodity is commonly sold called?
(a) The derived price.
(b) The market price.
(c) The prime price.
(d) The asking price.

8. Commonly, why does man #1 help man #2?
(a) Because man #1 sees man #2's genuine need for help.
(b) Because man #1 has a capacity for benevolence.
(c) Because man #1 derives personal benefit from helping man #2.
(d) Because man #2 has agreed to pay man #1.

9. What is the common instrument of commerce and exchanges in Abyssinia?
(a) Shells.
(b) Tobacco.
(c) Salt.
(d) Sugar.

10. What kind of rent comes to the landlord after deducting the expense of management, of repairs, and all other necessary charges?
(a) Net rent.
(b) Production rent.
(c) Gross rent.
(d) Consumption rent.

11. What kind of capital is employed in raising, manufacturing, or purchasing goods, and selling them again with a profit?
(a) Improving capital.
(b) Instrumental capital.
(c) Fixed capital.
(d) Circulating capital.

12. What do princes and sovereign states frequently do with their coinage?
(a) Augment the quantity of pure metal contained in their coins.
(b) Refuse to change the quantity of pure metal contained in their coins.
(c) Diminish the quantity of pure metal contained in their coins.
(d) Substitute the quantity of pure metal contained in their coins.

13. What is the sole end and purpose both of the fixed and circulating capitals?
(a) To maintain and augment the stock which may be traded for needed goods.
(b) To maintain and augment the stock which may be sold for profit.
(c) To maintain and augment the stock which may be used to expand the business.
(d) To maintain and augment the stock which may be reserved for immediate consumption.

14. What year was the Bank of England allowed to enlarge its capital stock?
(a) 1698.
(b) 1697.
(c) 1695.
(d) 1696.

15. What is one characteristic of the Mediterranean Sea which made it favorable for infant navigation?
(a) No islands.
(b) Shallow water.
(c) Many harbors.
(d) No tides.

Short Answer Questions

1. What causes the difference between a philosopher and a street porter?

2. What is the only universal, only accurate measure of value, only standard by which we can compare the values of different commodities at all times and at all places?

3. Originally, what did sailors fear?

4. In the rude ages of society, what was the common instrument of commerce?

5. Why are the silks of France better and cheaper than those of England?

(see the answer keys)

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