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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 5, Fiscal Policy.

Multiple Choice Questions

1. What does Friedman believe will become self-regulating?
(a) The gold standard.
(b) The World Bank.
(c) Exchange rates.
(d) Monetary stocks.

2. What does Friedman believe is one drawback of the Federal Reserve having so much power?
(a) When the Federal Reserve does well, only a few profit.
(b) The Federal Reserve has rules that are too strict to follow in order to make any real change.
(c) The Federal Reserve chairperson is elected and therefore subject to the whims of the public.
(d) When the Federal Reserve makes mistakes, the whole country suffers.

3. In Chapter 3, what does Friedman provide a history of?
(a) British colonialism.
(b) The Federal Reserve System.
(c) American monetary policy.
(d) World War I.

4. Friedman believes that economic control can lead to infringements on ______.
(a) Liberties.
(b) Social welfare.
(c) International trade.
(d) Licensing requirements.

5. The thought that the best use of government spending would be on useless projects is known as ______.
(a) "Emptying the pot."
(b) "Filling holes."
(c) "Evening it out."
(d) "Steaming the water."

Short Answer Questions

1. According to Friedman, what is liberty's greatest enemy?

2. According to Friedman, the market enables wide diversity, meaning power can be located in ______.

3. Which term refers to the government stimulating spending?

4. Friedman believes that free markets are not sufficient for political freedom since many countries demonstrate the possibility of ______.

5. In Friedman's analysis, what century is the historical exception to most men living in tyranny, servitude, and misery?

(see the answer key)

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