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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 3, The Anatomy of Crisis.

Multiple Choice Questions

1. Which of the following is not a function of the price system:
(a) transmitting information
(b) government established prices
(c) efficient use of resources
(d) distribution of income

2. A market failure occurs when:
(a) a producer goes bankrupt
(b) a producer finds there is no demand for his good
(c) an action or transaction affects third parties
(d) the production of a good is discontinued

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

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

5. Prices function to transmit information to all but:
(a) sellers
(b) no one in particular
(c) buyers
(d) manufacturerr

Short Answer Questions

1. The Principle of Comparative Advantage states that a nation should specialize in:

2. International trade theory is based on:

3. A deposit represents:

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

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

(see the answer key)

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