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) Commodity standards.
(b) The power to determine taxes.
(c) The trust of the people.
(d) Ability to issue stocks.

2. Besides enforcing contracts, what one other thing does Friedman say government should do?
(a) Provide for public transportation.
(b) Protect against external threats.
(c) Secure a country's borders.
(d) Regulate commerce.

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

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

5. For Friedman, where is the best place for power to be held?
(a) At the federal level.
(b) In the economic system.
(c) In the states.
(d) In the local community.

Short Answer Questions

1. According to Friedman, it can be argued that private schools ______ class distinctions, and therefore need government intervention.

2. The original balancing thought is based on whose economic philosophy?

3. A major point for Friedman is that politics and economics are not ______.

4. The thought that the best use of government spending would be on useless projects is known as ______.

5. What does Friedman believe is one drawback of the Federal Reserve having so much power?

Short Essay Questions

1. What is meant by "paternalistic grounds"?

2. Friedman accepts the reasoning that justifies "governmental action to alleviate poverty" (p. 191). What two issues must be addressed in order for this to happen?

3. Friedman explains that the economic activities of large numbers of individuals can be coordinated. In what two ways?

4. What is the neighborhood effect?

5. What is the balance wheel theory?

6. Where do you stand: are you on the liberal free market side or more on the government intervention side? Why?

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

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

9. What are the three sources of monopoly?

10. What is the modern day definition of liberalism?

(see the answer keys)

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