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 states that government should be ______.
(a) Held accountable.
(b) Destroyed.
(c) Expanded.
(d) Limited.

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

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?
(a) The common principle.
(b) The neighborhood effect.
(c) The colleague effect.
(d) The future growth principle.

4. Which of the following does Friedman dispute?
(a) The Central Bank holds too much power.
(b) Government should stay out of individual economic choices.
(c) The gold standard for backing money is good.
(d) A free market economic system works.

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

6. What is the basic problem of social life for Friedman?
(a) How to tax and provide responsively for the people.
(b) How to distribute wealth equitably.
(c) How to provide for entertainment opportunities.
(d) How to coordinate the economic activities of large numbers of individuals.

7. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.
(a) Finishers of the game.
(b) Rulers of the game.
(c) Leaders of the game.
(d) Players of the game.

8. What is one way Friedman believes some people criticize markets?
(a) It inequitably distributes wealth.
(b) It hurts those in power.
(c) It gives people what they want.
(d) It limits people's choices.

9. Friedman asserts that government is needed for the ______.
(a) "Rules of the system."
(b) "Rules of the road."
(c) "Rules of the game."
(d) "Rules of the citizens."

10. According to Friedman, whom does free trade benefit?
(a) The wealthier trading country.
(b) Both trading countries.
(c) Neither trading country.
(d) The poorer trading country.

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

12. Friedman believes that government that has the power to do good, also has the power to do ______.
(a) Bad.
(b) Right.
(c) Wrong.
(d) Nothing.

13. According to Friedman, which of the following is the least bad?
(a) Public monopoly.
(b) Private monopoly.
(c) Public regulation.
(d) Private regulation.

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

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

Short Answer Questions

1. What term refers to the Federal Reserve's ability to produce more money than is deposited?

2. Friedman believes that one governmental action that is justifiable is to set a ______ education level.

3. What does Friedman assert is an example of an appropriate task for government?

4. Friedman hypothesizes that the change from free market societies to economic controlled ones led classical liberals to worry that it would ______ political freedom.

5. In Friedman's mind, why is centralization attractive to many?

(see the answer keys)

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