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

Multiple Choice Questions

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

2. Which of the following is not a problem experienced by the British National Health Service?
(a) long waiting lists of patients
(b) rising costs
(c) lack of citizen interest
(d) strikes

3. Adam Smith wrote:
(a) The Wealth of Nations
(b) Economic Made Simple
(c) The Price System
(d) Das Kapital

4. Free international trade results in better relations between individuals who differ in all but:
(a) attitudes
(b) nationalities
(c) interests
(d) beliefs

5. Policies based on fair shares or 'to each according to his needs' have resulted in severe lack of liberties in all but the following:
(a) United States
(b) Cambodia
(c) China
(d) Russia

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

7. Regarding the depression, Roosevelt's adviser's believed in:
(a) waiting for the economy to heal itself
(b) aggressive intervention by government
(c) no intervention in the economy
(d) a balanced budget

8. Which of the following was not a part of the 1964 War on Poverty program?
(a) Social Security
(b) food stamps
(c) Medicare
(d) Medicaid

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

10. Restrictions of payments refers to:
(a) depositors inability to write checks
(b) government's refusal to pay benefits
(c) government's inability to pay its bills
(d) banks' refusal to give currency on demand to depositors who tried to make withdrawals

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

12. Fair shares programs penalize the:
(a) poor
(b) wealthy
(c) government
(d) all classes

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

14. What is the cause of the failure of many welfare programs?
(a) lack of interest by the public
(b) lack of interest by the government
(c) lack of recipients
(d) design and implementation flaws

15. Children from wealthy backgrounds have better chances in education and employment. This it not representative of:
(a) equality of outcomes
(b) equal rights
(c) equality of opportunity
(d) equality before God

Short Answer Questions

1. The words equality and liberty come from the:

2. The United States banking system is:

3. Trade restrictions create:

4. Which of the following is not a public assistance program?

5. Governments intervene in foreign currency markets:

(see the answer keys)

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