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's theory is that monetary exchange rates will allow trades across countries to ______ in accord with those rates.
(a) Increase.
(b) Stagnate.
(c) Equilibrate.
(d) Decrease.

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

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

4. What major event does Friedman strongly believe was a result of the government mishandling the money supply?
(a) The Great Depression.
(b) Prohibition.
(c) World War I.
(d) None of the answers is correct.

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

6. What does Friedman believe is one drawback of the Federal Reserve having so much power?
(a) When the Federal Reserve does well, only a few profit.
(b) The Federal Reserve chairperson is elected and therefore subject to the whims of the public.
(c) The Federal Reserve has rules that are too strict to follow in order to make any real change.
(d) When the Federal Reserve makes mistakes, the whole country suffers.

7. What does Friedman believe is an appropriate rate of increase for the Federal Reserve?
(a) None. That is not a goal of the Federal Reserve.
(b) 5%-7%.
(c) 1%-3%.
(d) 3%-5%.

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

9. In Friedman's opinion, what will check government power?
(a) A strong judicial system.
(b) The people.
(c) A free market.
(d) A tripartite government.

10. Friedman's analysis of government argues that it is not ______.
(a) Expansionary.
(b) Reductionary.
(c) Stagnantary.
(d) Contractionary.

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

12. Friedman makes the distinction between education and ______.
(a) Income.
(b) Schooling.
(c) Instruction.
(d) Aging.

13. Past and current definitions of liberalism are the same with respect to ______.
(a) Free markets and the rule of law.
(b) Civil freedoms and democracy.
(c) Distribution of wealth and the welfare state.
(d) Paternalism and individualism.

14. According to Friedman, what cannot exist without a literate and informed population?
(a) A progressive political system.
(b) Democratic societies.
(c) First world countries.
(d) A well-armed militia.

15. What is the name of the system with the purpose of regulating monetary policy between leading countries?
(a) The World Bank System.
(b) The Bretton Woods System.
(c) The Gold Standard System.
(d) The International Monetary System.

Short Answer Questions

1. In the market described by Friedman, exchanges between households are ______.

2. A common misunderstanding of economic freedom, according to Friedman, is that it emphasizes ______.

3. What term refers to the circumstance under which the action of one individual imposes significant costs on other individuals for which it is not feasible to make him compensate them?

4. According to Friedman, what is one problem with government stimulus during a recession?

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

(see the answer keys)

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