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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 4, International and Financial Trade Arrangements.

Multiple Choice Questions

1. What does Friedman believe is an appropriate rate of increase for the Federal Reserve?
(a) None. That is not a goal of the Federal Reserve.
(b) 5%-7%.
(c) 3%-5%.
(d) 1%-3%.

2. Friedman uses the example of selling ______ to demonstrate a true global economy.
(a) Corn.
(b) Wheat.
(c) Rice.
(d) Oil.

3. Friedman advocates the end of ______.
(a) Export quotas.
(b) Capitalism.
(c) Exchange rates.
(d) The free market.

4. What does Friedman claim that governments abuse?
(a) The trust of the people.
(b) The power to determine taxes.
(c) Commodity standards.
(d) Ability to issue stocks.

5. According to Friedman, whom does free trade benefit?
(a) The wealthier trading country.
(b) Both trading countries.
(c) Neither trading country.
(d) The poorer trading country.

Short Answer Questions

1. Friedman advocates that government should not be a master, but a/an ______.

2. What term refers to the Federal Reserve's ability to produce more money than is deposited?

3. According to Friedman, which of the following is the least bad?

4. Friedman's theory is that monetary exchange rates will allow trades across countries to ______ in accord with those rates.

5. By Friedman's account, the market permits unanimity without ______.

(see the answer key)

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