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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 Federal Reserve's ability to produce more money than is deposited?
(a) Percent fulfillment banking.
(b) Overdraft protection.
(c) Reserve ability production.
(d) Fractional reserve banking.

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

3. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.
(a) 1929-33.
(b) 1920-21.
(c) 1937-38.
(d) 1926-27.

4. What is one method that governments have used to alter the distribution of income?
(a) Real estate law.
(b) Income taxation.
(c) Selling bonds.
(d) Social welfare.

5. Friedman states that ______ is a generator of inequality.
(a) Taxation.
(b) Unemployment.
(c) Social security.
(d) Redistribution.

Short Answer Questions

1. According to Friedman, what is the goal of government intervention regarding the distribution of income?

2. Friedman makes the distinction between education and ______.

3. Friedman believes that one governmental action that is justifiable is to set a ______ education level.

4. What does Friedman believe is an appropriate rate of increase for the Federal Reserve?

5. What is one factor that Friedman believes has reduced inequality?

(see the answer key)

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