Capitalism and Freedom Test | Mid-Book Test - Medium

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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

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

2. One of Friedman's claims for government involvement in education asserts that there are ______ to education.
(a) Extreme costs.
(b) Minimal costs.
(c) Positive externalities.
(d) Negative externalities.

3. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?
(a) A system of checks and balances.
(b) Decisions by committee.
(c) Executive decision.
(d) Majority rule.

4. Which term describes the purpose of federal spending?
(a) "Balance wheel."
(b) "Seesaw."
(c) "Balance beam."
(d) None of the answers is correct.

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

Short Answer Questions

1. Which of the following cannot be justified by Friedman for government interventions?

2. Which of the following, for Friedman, is the most important factor for the Federal Reserve?

3. In Friedman's opinion, what will check government power?

4. 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?

5. Friedman uses the example of selling ______ to demonstrate a true global economy.

Short Essay Questions

1. What is the relationship Friedman describes between economic freedom and political freedom?

2. According to Friedman, what is the difference between schooling and education? What does the government do?

3. What examples does Friedman give of appropriate roles of government in a free society?

4. Where does Friedman believe power in government should be located?

5. Explain Friedman's voucher proposal.

6. What are Friedman's recommendations in order for stocks to become self-regulating?

7. What is the modern day definition of liberalism?

8. What is meant when Friedman states "Government as rule-maker and umpire"?

9. What is the neighborhood effect?

10. Explain "floating exchange rates."

(see the answer keys)

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