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

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

3. For Friedman, what is something that when privately owned can be used if the price is right?
(a) Taxes.
(b) Political campaigns.
(c) Educational systems.
(d) Media.

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

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

6. What term refers to the Federal Reserve's ability to produce more money than is deposited?
(a) Fractional reserve banking.
(b) Overdraft protection.
(c) Reserve ability production.
(d) Percent fulfillment banking.

7. Which type of education does Friedman not advocate the government paying for?
(a) Vocational.
(b) Industrial.
(c) Minimal.
(d) Liberal.

8. One argument for government spending that Friedman refutes is that it will reduce what?
(a) Competition.
(b) Fraud.
(c) Unemployment.
(d) Crime.

9. 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 future growth principle.
(c) The colleague effect.
(d) The neighborhood effect.

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

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

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

13. Which of the following can be justified by Friedman for government interventions?
(a) Minimum wage.
(b) The draft.
(c) Subsidizing farm production.
(d) Property rights.

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

Short Answer Questions

1. In Chapter 3, what does Friedman provide a history of?

2. What does Friedman believe will become self-regulating?

3. What does Friedman prefer when it comes to exchange rates?

4. What does Friedman claim that governments abuse?

5. Past and current definitions of liberalism are the same with respect to ______.

(see the answer keys)

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