Capitalism and Freedom Test | Mid-Book Test - Easy

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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. A key component of the government spending is the ______.
(a) Reduction effect.
(b) Substitution effect.
(c) Multiplier effect.
(d) Externality effect.

2. What does Friedman believe will markets do over time to monopolies?
(a) Make them obsolete.
(b) Break them up.
(c) Strengthen them.
(d) Separate them slowly.

3. According to Friedman, it can be argued that private schools ______ class distinctions, and therefore need government intervention.
(a) Increase.
(b) Maintain.
(c) Exacerbate.
(d) Diminish.

4. What does Friedman claim that governments abuse?
(a) The power to determine taxes.
(b) The trust of the people.
(c) Ability to issue stocks.
(d) Commodity standards.

5. Friedman states that government should be ______.
(a) Streamlined.
(b) Consolidated.
(c) Incorporated.
(d) Decentralized.

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

7. According to Friedman, the market enables wide diversity, meaning power can be located in ______.
(a) Small pockets of individual actors.
(b) The hands of a few.
(c) Large pockets with limited interests.
(d) The hands of many.

8. Friedman believes that all of the following are appropriate for fiscal policy except ______.
(a) Avoiding erratic changes in spending.
(b) Fluctuating in spending based on the political climate.
(c) Spending based on community priorities.
(d) Planning for stable tax rates.

9. For Friedman, what is an all-embracing ethic?
(a) Religion.
(b) Government.
(c) Education.
(d) Freedom.

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

11. Originally, liberalism fought for freedom of thought, free-markets, free trade, constitutionalism, representative government, and ______.
(a) The rule of law.
(b) Rights of the poor.
(c) Fair trade.
(d) A welfare state.

12. A common misunderstanding of economic freedom, according to Friedman, is that it emphasizes ______.
(a) Wealth.
(b) Prosperity.
(c) Materialism.
(d) Socialism.

13. Friedman advocates that government should not be a master, but a/an ______.
(a) Instrument.
(b) Philosophy.
(c) Mechanism.
(d) Slave.

14. Besides enforcing contracts, what one other thing does Friedman say government should do?
(a) Provide for public transportation.
(b) Secure a country's borders.
(c) Regulate commerce.
(d) Protect against external threats.

15. What is the term for currency not being traded for any amount of another currency?
(a) Inconvertible.
(b) Irreversible.
(c) None of the answers is correct.
(d) Unconvertible.

Short Answer Questions

1. Friedman advocates that individuals should be able to buy and sell ______.

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

3. For Friedman, where is the best place for power to be held?

4. Which term refers to the government stimulating spending?

5. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.

(see the answer keys)

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