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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 solution Friedman proposes is to give parents ______ for schooling.
(a) Tokens.
(b) Vouchers.
(c) Credits.
(d) Coupons.

2. Friedman believes that free markets are not sufficient for political freedom since many countries demonstrate the possibility of ______.
(a) Economic freedom.
(b) Authoritarian capitalism.
(c) Dictatorial government.
(d) Laissez-faire markets.

3. What does Friedman prefer when it comes to exchange rates?
(a) Sinking exchange rates.
(b) Floating exchange rates.
(c) Hovering exchange rates.
(d) Rising exchange rates?

4. For Friedman, where is the best place for power to be held?
(a) In the states.
(b) At the federal level.
(c) In the local community.
(d) In the economic system.

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

Short Answer Questions

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

2. By Friedman's account, the market permits unanimity without ______.

3. What does Friedman assert is an example of an appropriate task for government?

4. Friedman's theory on government intervention is that government is needed to be what regarding disputes?

5. Originally, liberalism fought for freedom of thought, free-markets, free trade, constitutionalism, representative government, and ______.

Short Essay Questions

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

2. What is the neighborhood effect?

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

4. Explain the price system as described by Friedman.

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

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

7. How does Friedman argue that floating exchange rates can affect international trade?

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

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

10. What is meant by "paternalistic grounds"?

(see the answer keys)

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