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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 5, Created Equal.

Multiple Choice Questions

1. The United States banking system is:
(a) a full reserve system
(b) a fractional reserve system
(c) not dependent on reserves
(d) a no reserve system

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

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

4. What words did Thomas Jefferson write?
(a) all men are created equal
(b) equality is not a part of freedom
(c) there is no such thing as equality
(d) equality is not important

5. Government subsidies to industry are viewed as:
(a) a way to increase efficiency
(b) unfair competition
(c) good economic policy
(d) a necessity

Short Answer Questions

1. In regard to equality and liberty:

2. According to Friedman, the former Soviet economy was based on:

3. Governments intervene in foreign currency markets:

4. Government interferes with the price system by:

5. New Deal temporary programs included all but:

(see the answer key)

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