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 prefer when it comes to exchange rates?
(a) Sinking exchange rates.
(b) Rising exchange rates?
(c) Hovering exchange rates.
(d) Floating exchange rates.

2. Friedman argues against the theory that $100 in government spending will increase income by ______.
(a) $100.
(b) $50.
(c) $300.
(d) $150.

3. Friedman advocates the end of ______.
(a) The free market.
(b) Capitalism.
(c) Export quotas.
(d) Exchange rates.

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

5. What is one example of a negative externality?
(a) Welfare.
(b) Lack of voting.
(c) Pollution.
(d) Private education.

Short Answer Questions

1. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?

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

3. Friedman asserts that government is needed for the ______.

4. Friedman states that government should be ______.

5. According to Friedman, what is one problem with government stimulus during a recession?

Short Essay Questions

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

2. What is the neighborhood effect?

3. How does Friedman argue that floating exchange rates can affect international trade?

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

5. How does Friedman explain government's role in a free society?

6. Explain the price system as described by Friedman.

7. What is fiscal policy?

8. What reason does Friedman refute for government spending?

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

10. What is meant by "paternalistic grounds"?

(see the answer keys)

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