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

2. 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 colleague effect.
(b) The neighborhood effect.
(c) The common principle.
(d) The future growth principle.

3. Friedman's theory on government intervention is that government is needed to be what regarding disputes?
(a) Umpire.
(b) Groundskeeper.
(c) Announcer.
(d) Fan.

4. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.
(a) Leaders of the game.
(b) Finishers of the game.
(c) Players of the game.
(d) Rulers of the game.

5. Friedman's evidence suggests that for every $100 of government spending, a certain amount is added to income. How much?
(a) $100.
(b) $50.
(c) $150.
(d) $300.

Short Answer Questions

1. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?

2. For Friedman, what is an all-embracing ethic?

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

4. Friedman theorizes that in extreme cases where parents don't pay for schooling, the government could provide a ______.

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

Short Essay Questions

1. According to Friedman what is the role of government?

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

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

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

5. What is the modern day definition of liberalism?

6. What is the balance wheel theory?

7. Explain the externalities argument that Friedman describes for government involvement in education

8. What reason does Friedman refute for government spending?

9. What is fiscal policy?

10. What was the definition of liberalism prior to 1900?

(see the answer keys)

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