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

Multiple Choice Questions

1. A change in prices affects all but the following:
(a) wages
(b) nothing
(c) incentrive to act on information
(d) procedures income

2. After World War II there was a lot of interest in:
(a) imperialism
(b) central economic planning
(c) laissez-faire capitalism
(d) the price system

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

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

5. 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:
(a) visible hand
(b) invisible hand
(c) command
(d) voluntary nature

6. An exchange rate is the:
(a) bill of lading
(b) interest rate in the foreign country
(c) the way trade barriers are established
(d) price of one currency in terms of another currency

7. The Federal Reserve Act was legislated in:
(a) 1929
(b) 1909
(c) 1913
(d) 1908

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

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

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

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

12. A tariff implemented to raise employment in the domestic nation:
(a) has no effect on employment
(b) benefits all workers
(c) lowers employment in the foreign nation
(d) benefits all consumers

13. Equality is discussed in all but the following ways:
(a) opportunity
(b) before God
(c) in every way
(d) outcomes

14. An egalitarian supports:
(a) total freedom for all
(b) programs resulting in greater liberty
(c) equality of outcomes
(d) get rich quick schemes

15. A run on a bank occurs when depositors:
(a) try to withdraw their money in cash at the same time
(b) depositors refuse loans
(c) depositors refuse to deposit money
(d) the bank refuses to make loans

Short Answer Questions

1. What did Alexis de Tocqueville say was the outstanding characteristic of America?

2. Government interferes with the price system by:

3. What interferes with the transmittal of information by prices?

4. The economist that changed the way of economic thinking regarding depressions was:

5. The Great Depression began in:

(see the answer keys)

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