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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. One argument for government spending that Friedman refutes is that it will reduce what?
(a) Competition.
(b) Crime.
(c) Fraud.
(d) Unemployment.

2. Friedman states that the problem with teacher salaries is not that they are too low, but that they are ______.
(a) Computed based on seniority.
(b) Linked to the amount of education the teacher has.
(c) The same regardless of quality.
(d) Not inclusive of benefits.

3. What does Friedman believe coordinates individuals over vast distances and across all belief systems?
(a) The geographic system.
(b) The electoral system.
(c) The educational system.
(d) The price system.

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

5. Friedman's evidence suggests that for every $100 of government spending, a certain amount is added to income. How much?
(a) $150.
(b) $100.
(c) $300.
(d) $50.

Short Answer Questions

1. According to Friedman, what is a necessary condition for political freedom?

2. Friedman hypothesizes that the change from free market societies to economic controlled ones led classical liberals to worry that it would ______ political freedom.

3. Friedman believes that vocational and professional schools should be totally ______ run.

4. Friedman uses the example of selling ______ to demonstrate a true global economy.

5. What term refers to the argument for education that parents will not do best for their children?

Short Essay Questions

1. What is the modern day definition of liberalism?

2. What is Friedman's definition of political freedom? Of economic freedom?

3. What examples does Friedman give of when the Federal Reserve System mismanaged the money supply?

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

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

6. Concerning business cycles that Friedman explains, what is one role of government?

7. Explain the price system as described by Friedman.

8. Explain the externalities argument that Friedman describes for government involvement in education

9. What is fiscal policy?

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

(see the answer keys)

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