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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. When a government has borrowed a great deal of money, what is the justification for imposing new taxes?
(a) To run a government which has become more expensive.
(b) To pay back the borrowed money.
(c) To pay the interest on the borrowed money.
(d) To refill the emptied treasury.

2. What is one consequence of marketplace competition?
(a) It raises the profits of stock.
(b) It lowers the profits of stock.
(c) It lowers the wages of labor.
(d) It lowers the need for workmen.

3. What does the lender consider stock lent at an interest?
(a) An industry.
(b) A revenue.
(c) A profit.
(d) A capital.

4. How does that part of the annual production, which comes either from the ground or from the hands of the productive laborers and is destined for replacing capital, compare between rich and poor countries?
(a) It is less in rich countries.
(b) It is greater in poor countries.
(c) It is less in poor countries.
(d) It is greater in rich countries.

5. What tends to discourage every industry in a given nation and enable foreign markets to undersell goods even in the home market?
(a) The rise in the money price of commodities.
(b) Government directed money prices of commodities.
(c) The fall in the money price of commodities.
(d) Fixed money prices of commodities.

Short Answer Questions

1. What does the part of the annual production of the land and labor of any country which replaces a capital do?

2. How do most men choose to employ their capitals?

3. Before the American Revolution, what monopoly did Britain hold in Maryland and Virginia?

4. How does annual consumption compare to annual spending?

5. During the twelve years of the reign of Queen Anne, what was the highest interest rate which could be taken for borrowed money?

Short Essay Questions

1. What is the principal cause for the rapid progress of the American colonies towards wealth?

2. What are the three ways capital is used in the natural growth of a new society?

3. In the North American colonies, what does an artificer do who has acquired a little more stock than is necessary for carrying on his own business in supplying the neighboring country?

4. How has the natural order of growth been inverted in some of the the modern states of Europe?

5. What are the four general maxims regarding taxes?

6. Why does want of parsimony in time of peace necessitate the contracting of debt in time of war?

7. How does the capital of a retailer and manufacturer differ?

8. How does a country fix the rate of interest on borrowed money so as to discourage usury?

9. What are bounties?

10. What happens when a country forbids collecting interest on borrowed money?

(see the answer keys)

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