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. According to Friedman, the market enables wide diversity, meaning power can be located in ______.
(a) The hands of many.
(b) Large pockets with limited interests.
(c) Small pockets of individual actors.
(d) The hands of a few.

2. According to Friedman, which of the following is the least bad?
(a) Private monopoly.
(b) Public regulation.
(c) Private regulation.
(d) Public monopoly.

3. Friedman's analysis of government argues that it is not ______.
(a) Reductionary.
(b) Stagnantary.
(c) Expansionary.
(d) Contractionary.

4. What is the term for currency not being traded for any amount of another currency?
(a) Unconvertible.
(b) Irreversible.
(c) Inconvertible.
(d) None of the answers is correct.

5. In Friedman's mind, why is centralization attractive to many?
(a) Government can promote the public interest.
(b) Consolidation of power.
(c) Streamlined services.
(d) Better pool of resources.

Short Answer Questions

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

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

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

4. What term refers to the Federal Reserve's ability to produce more money than is deposited?

5. Besides enforcing contracts, what one other thing does Friedman say government should do?

Short Essay Questions

1. What is the balance wheel theory?

2. Explain Friedman's voucher proposal.

3. Explain how international currency rates have changed since 1900.

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

5. What is Friedman's definition of political freedom? Of economic freedom?

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

7. What is meant by "paternalistic grounds"?

8. What is the modern day definition of liberalism?

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

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

(see the answer keys)

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