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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 major disadvantage Friedman describes of the proposed negative income tax?
(a) Implementation implications.
(b) Political implications.
(c) Determining the level of tax.
(d) Determining the level of benefit.

2. Friedman gives the following examples of the negative effects of government intervention except ______.
(a) Farm subsidies.
(b) Housing programs.
(c) Regulation of the railroads.
(d) Religious freedom acts.

3. What has been more potent for progress than the visible hand for retrogression according to Friedman?
(a) Invisible hand.
(b) None of the answers is correct.
(c) Transparent hand.
(d) Hidden hand.

4. Another threat for Friedman to the preservation and expansion of freedom is:
(a) An internal threat of labor unions.
(b) An internal threat of licensure requirements.
(c) An internal threat of government regulation.
(d) An internal threat of unfair political practices.

5. What term describes the deliberate setting of prices through an agreement by firms?
(a) Labor unions.
(b) Free market.
(c) Monopoly.
(d) Collusion.

Short Answer Questions

1. In 1961, how much did the government spend on direct welfare payments and programs?

2. Which group does Friedman believe to be contradictory in their views on free speech and fair employment laws?

3. What does Friedman believe makes registration easier?

4. What problem did Dicey write about in 1914?

5. What example does Friedman use to argue against the redistribution of wealth?

Short Essay Questions

1. What is the progressive income tax?

2. What is Friedman's recommendation regarding an income tax?

3. Where do you stand: are you on the liberal free market side or more on the government intervention side? Why?

4. According to Friedman, do monopolies have any sort of "social responsibility"?

5. What does Friedman say about public housing as a form of social welfare?

6. In Chapter 13, Friedman summarizes his examples. Which do you agree with?

7. What does Friedman believe are the effects of farm price supports?

8. What are the three sources of monopoly?

9. Who are the biggest advocates of occupational licensure that Friedman describes?

10. What are the three forms of control discussed by Friedman in Chapter 9, Occupational Licensure?

(see the answer keys)

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