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

Multiple Choice Questions

1. According to Friedman, what is one problem with government stimulus during a recession?
(a) The attempts often have a negative effect.
(b) The measures do not take effect until after the recession.
(c) The stimulus is generally too small to jump-start the economy.
(d) More often than not, inflation skyrockets.

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

3. Which type of education does Friedman not advocate the government paying for?
(a) Industrial.
(b) Liberal.
(c) Minimal.
(d) Vocational.

4. In the market described by Friedman, exchanges between households are ______.
(a) Obligatory.
(b) Unwilling.
(c) Coerced.
(d) Voluntary.

5. What does Friedman believe will markets do over time to monopolies?
(a) Separate them slowly.
(b) Strengthen them.
(c) Break them up.
(d) Make them obsolete.

6. Which of the following cannot be justified by Friedman for government interventions?
(a) Public parks.
(b) Roads.
(c) Vouchers for education.
(d) Free speech.

7. Friedman points out one idea that is often forgotten is that political and economic institutions have been ______.
(a) Unfree.
(b) Autonomic.
(c) Free.
(d) Suppressed.

8. What is the name of the system with the purpose of regulating monetary policy between leading countries?
(a) The Gold Standard System.
(b) The Bretton Woods System.
(c) The World Bank System.
(d) The International Monetary System.

9. Friedman believes that one governmental action that is justifiable is to set a ______ education level.
(a) Maximum.
(b) Minimum.
(c) Rational.
(d) Standard.

10. According to Friedman, what is a necessary condition for political freedom?
(a) Governmental regulation.
(b) Competitive capitalism.
(c) Fair trade.
(d) A high gross domestic product.

11. According to Friedman, what is liberty's greatest enemy?
(a) Elected leaders.
(b) The Federal government.
(c) Concentration of power.
(d) The educational system.

12. According to Friedman, which of the following is the least bad?
(a) Public monopoly.
(b) Private regulation.
(c) Private monopoly.
(d) Public regulation.

13. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.
(a) Leaders of the game.
(b) Finishers of the game.
(c) Players of the game.
(d) Rulers of the game.

14. Friedman's theory on government intervention is that government is needed to be what regarding disputes?
(a) Fan.
(b) Groundskeeper.
(c) Announcer.
(d) Umpire.

15. What major event does Friedman strongly believe was a result of the government mishandling the money supply?
(a) The Great Depression.
(b) Prohibition.
(c) None of the answers is correct.
(d) World War I.

Short Answer Questions

1. Who does Friedman think should set exchange rates?

2. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?

3. In Friedman's opinion, what will check government power?

4. Which of the following does Friedman dispute?

5. Past and current definitions of liberalism are the same with respect to ______.

(see the answer keys)

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