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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. What is the term for currency not being traded for any amount of another currency?
(a) Unconvertible.
(b) None of the answers is correct.
(c) Inconvertible.
(d) Irreversible.

2. Who does Friedman state rejects the view that the government is the patron or master of the citizenry?
(a) The poor man.
(b) The free man.
(c) The rich man.
(d) The educated man.

3. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.
(a) 1929-33.
(b) 1920-21.
(c) 1926-27.
(d) 1937-38.

4. Friedman's belief is that what cause would free trade substantially promote, both domestically and internationally?
(a) Political power.
(b) Regulation.
(c) Currency exchange.
(d) Freedom.

5. The original balancing thought is based on whose economic philosophy?
(a) Marx.
(b) Smith.
(c) Krugman.
(d) Keynes.

Short Answer Questions

1. Who does Friedman think should set exchange rates?

2. What is the name of the system with the purpose of regulating monetary policy between leading countries?

3. Friedman advocates the end of ______.

4. According to Friedman, what is one problem with government stimulus during a recession?

5. Friedman believes that all of the following are appropriate for fiscal policy except ______.

Short Essay Questions

1. Does Friedman believe that most societies have been free or not free?

2. What does Friedman think of the remark, "Ask not what your country can do for you, ask what you can do for your country"?

3. What is meant by "paternalistic grounds"?

4. Explain "floating exchange rates."

5. According to Friedman what is the role of government?

6. Why does Friedman believe government power should be limited?

7. What does Friedman believe to be the cause of the Great Depression?

8. What is meant when Friedman states "Government as rule-maker and umpire"?

9. Where does Friedman believe power in government should be located?

10. Explain the paternalistic argument that Friedman describes for government involvement in education.

(see the answer keys)

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