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. A key component of the government spending is the ______.
(a) Reduction effect.
(b) Multiplier effect.
(c) Substitution effect.
(d) Externality effect.

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

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

4. What does Friedman believe will markets do over time to monopolies?
(a) Separate them slowly.
(b) Make them obsolete.
(c) Strengthen them.
(d) Break them up.

5. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?
(a) Education.
(b) National defense.
(c) Postal service.
(d) Healthcare.

Short Answer Questions

1. For Friedman, where is the best place for power to be held?

2. In Friedman's opinion, what should individuals be allowed to do?

3. Friedman's belief is that what cause would free trade substantially promote, both domestically and internationally?

4. What does Friedman believe needs protection in order for the freedom of the market to arise?

5. What does Friedman claim that governments abuse?

Short Essay Questions

1. What does Friedman think of the remark, "Ask not what your country can do for you, ask what you can do for your country"?

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

3. What does Friedman believe to be the cause of the Great Depression?

4. What examples does Friedman give of when the Federal Reserve System mismanaged the money supply?

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

6. Explain the price system as described by Friedman.

7. What is meant by "paternalistic grounds"?

8. Explain "floating exchange rates."

9. What is the balance wheel theory?

10. What is fiscal policy?

(see the answer keys)

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