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 believes that economic control can lead to infringements on ______.
(a) Licensing requirements.
(b) Social welfare.
(c) International trade.
(d) Liberties.

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

3. By Friedman's account, the market permits unanimity without ______.
(a) Solitude.
(b) Resentment.
(c) Conformity.
(d) Freedom.

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

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

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

7. Friedman believes that one governmental action that is justifiable is to set a ______ education level.
(a) Minimum.
(b) Maximum.
(c) Standard.
(d) Rational.

8. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.
(a) 1920-21.
(b) 1929-33.
(c) 1937-38.
(d) 1926-27.

9. Which of the following, for Friedman, is the most important factor for the Federal Reserve?
(a) Loans and lending practices.
(b) Stability.
(c) Regulation of the market.
(d) Economic growth.

10. What does Friedman believe coordinates individuals over vast distances and across all belief systems?
(a) The educational system.
(b) The electoral system.
(c) The price system.
(d) The geographic system.

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

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

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

14. In Friedman's time, what was illegal to buy or sell?
(a) Silver.
(b) Gold.
(c) Alcohol.
(d) Ethanol.

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

Short Answer Questions

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

2. What is one example of a negative externality?

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

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

5. For Friedman, what is something that when privately owned can be used if the price is right?

(see the answer keys)

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