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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 10, The Distribution of Income.

Multiple Choice Questions

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

2. What is the relationship between capitalism and the fraction of income paid for capital in countries?
(a) Inverse.
(b) Correlational.
(c) Direct.
(d) Perpendicular.

3. Who does Friedman believe is most critical of capitalism?
(a) Communists.
(b) Democrats.
(c) Socialists.
(d) Marxists.

4. According to Friedman, what is the Federal Reserve lacking?
(a) A Constitution of sorts.
(b) A Declaration of Independence of sorts.
(c) A Magna Carta of sorts.
(d) A Rosetta Stone of sorts.

5. Friedman theorizes that in extreme cases where parents don't pay for schooling, the government could provide a ______.
(a) Allowance.
(b) Pass.
(c) Discount.
(d) Subsidy.

Short Answer Questions

1. What caused all the major nations to abandon the gold standard?

2. What is one method that governments have used to alter the distribution of income?

3. Friedman believes that the goddess of chance is ______.

4. Friedman states that the problem with teacher salaries is not that they are too low, but that they are ______.

5. What term refers to the argument for education that parents will not do best for their children?

(see the answer key)

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