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

Multiple Choice Questions

1. Governments intervene in foreign currency markets:
(a) by refusing to release currency to the market
(b) by buying and selling domenstic and foreign currency
(c) by increasing imports
(d) by increasing exports

2. Protection refers to:
(a) insurance on shipments
(b) safe production methods
(c) tariffs and other trade restrictions
(d) insurance and benefits for workers

3. Which of the following is not a public assistance program?
(a) Medicaid
(b) food stamps
(c) Aid to Families with Dependent Children
(d) Earned Income Credit

4. The infant industry argument for protection says a:
(a) only certain industries should receive protection
(b) all new industries should be given protection
(c) new industry should be given protection until it matures and can compete on its own
(d) no industries should receive protection

5. The New Deal programs were not carried to their completion because of:
(a) World War II
(b) the government ran out of money
(c) the end of the Depression
(d) World War I

6. Which bank failure precipitated the banking crisis of 1930?
(a) Chase
(b) The Bank of the United States
(c) Bank of England
(d) Knickerbocker Trust

7. Economic freedom refers to all but which of the following:
(a) ability to select what investments to make
(b) ability to decide what goods to purchase
(c) ability to choose how much to spend
(d) forced savings

8. Interested sophistry refers to:
(a) a new production technique
(b) buy cheap and selling high
(c) a new marketing tool
(d) the knowledge of consumers

9. New Deal temporary programs included all but:
(a) WPA
(b) medicine
(c) direct federal relief to the indigent
(d) Civilian Conservations Corps

10. The Federal Deposit Insurance Corporation:
(a) provides mortgage insurance for homeowners
(b) guarantees the repayment of bank loans
(c) guarantees deposits against a loss up to a stated amount
(d) guarantees the full amount of all deposits against loss

11. The first thing Roosevelt did after his inauguration was to:
(a) order banks to close for a bank holiday
(b) raise taxes on profits
(c) order people to work
(d) authorize open market operations

12. Enforced equality is a part of life in:
(a) government
(b) schools
(c) apartment buildings
(d) communes

13. What interferes with the transmittal of information by prices?
(a) actions of sellers
(b) Governmental control of prices
(c) actions of buyers
(d) actions of manufacturers

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

15. The purpose of urban renewal projects is to:
(a) eliminate slums
(b) build housing projects
(c) finance the building of offices
(d) provide low cost housing

Short Answer Questions

1. The price system functions in such a way that each individual acting in his own best interests, makes everyone better off. This concept is known as the:

2. The term human capital refers to the:

3. Equality is discussed in all but the following ways:

4. A market failure occurs when:

5. Children from wealthy backgrounds have better chances in education and employment. This it not representative of:

(see the answer keys)

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