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. Friedman argues against the theory that $100 in government spending will increase income by ______.
(a) $50.
(b) $150.
(c) $100.
(d) $300.

2. Which of the following cannot be justified by Friedman for government interventions?
(a) Vouchers for education.
(b) Public parks.
(c) Roads.
(d) Free speech.

3. What does Friedman say can government not duplicate?
(a) The creativity of the individual.
(b) The power of local control.
(c) An international monitoring system.
(d) The free market economic system.

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

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

6. Which term refers to the government stimulating spending?
(a) "Rev the engine."
(b) "Prime the pump."
(c) "Grease the skids."
(d) "Charge the battery."

7. In Friedman's analysis, what century is the historical exception to most men living in tyranny, servitude, and misery?
(a) 20th.
(b) 17th.
(c) 18th.
(d) 19th.

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

9. In Friedman's opinion, what should individuals be allowed to do?
(a) Pursue their own ends.
(b) Choose their own religion.
(c) Elect their own leaders.
(d) Print their own money.

10. Friedman asserts that government restriction centralizes ______.
(a) Power.
(b) Elitism.
(c) Wealth.
(d) Goods.

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

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

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

14. Friedman's theory on government intervention is that government is needed to be what regarding disputes?
(a) Fan.
(b) Announcer.
(c) Umpire.
(d) Groundskeeper.

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

Short Answer Questions

1. The original balancing thought is based on whose economic philosophy?

2. What does Friedman believe coordinates individuals over vast distances and across all belief systems?

3. Which term describes the purpose of federal spending?

4. Who does Friedman state rejects the view that the government is the patron or master of the citizenry?

5. What does Friedman believe is an appropriate rate of increase for the Federal Reserve?

(see the answer keys)

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