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

2. By Friedman's account, the market permits unanimity without ______.
(a) Conformity.
(b) Resentment.
(c) Solitude.
(d) Freedom.

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

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

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

Short Answer Questions

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

2. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.

3. In Chapter 3, what does Friedman provide a history of?

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

5. Friedman defines a country as a collection of ______.

Short Essay Questions

1. According to Friedman, what is the difference between schooling and education? What does the government do?

2. What is the multiplier effect?

3. What was the definition of liberalism prior to 1900?

4. What is the balance wheel theory?

5. Explain how international currency rates have changed since 1900.

6. What examples does Friedman give of appropriate roles of government in a free society?

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

8. Friedman explains that the economic activities of large numbers of individuals can be coordinated. In what two ways?

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

10. What reason does Friedman refute for government spending?

(see the answer keys)

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