Capitalism and Freedom Quiz | Eight Week Quiz D

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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 5, Fiscal Policy.

Multiple Choice Questions

1. According to Friedman, what is one problem with government stimulus during a recession?
(a) The measures do not take effect until after the recession.
(b) The stimulus is generally too small to jump-start the economy.
(c) More often than not, inflation skyrockets.
(d) The attempts often have a negative effect.

2. One role of government argued by the New Deal was to ______.
(a) Provide subsidies for the poor.
(b) Even out economic cycles.
(c) Eliminate excessive alcohol drinking.
(d) Regulate military spending.

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

4. 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) $50.
(d) $300.

5. What is one example of a negative externality?
(a) Lack of voting.
(b) Private education.
(c) Pollution.
(d) Welfare.

Short Answer Questions

1. Besides enforcing contracts, what one other thing does Friedman say government should do?

2. What major event does Friedman strongly believe was a result of the government mishandling the money supply?

3. According to Friedman, what is the Federal Reserve lacking?

4. In Friedman's analysis, what century is the historical exception to most men living in tyranny, servitude, and misery?

5. What is the basic problem of social life for Friedman?

(see the answer key)

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