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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 major event does Friedman strongly believe was a result of the government mishandling the money supply?
(a) None of the answers is correct.
(b) The Great Depression.
(c) World War I.
(d) Prohibition.

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

3. What term refers to the argument for education that parents will not do best for their children?
(a) Paternalistic.
(b) Maternalistic.
(c) Employment.
(d) Sacrificial.

4. What does Friedman believe is an appropriate rate of increase for the Federal Reserve?
(a) 5%-7%.
(b) 1%-3%.
(c) None. That is not a goal of the Federal Reserve.
(d) 3%-5%.

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

Short Answer Questions

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

2. Friedman makes the distinction between education and ______.

3. For Friedman, what is one major problem in interpreting the evidence on the distribution of income?

4. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.

5. One of Friedman's claims for government involvement in education asserts that there are ______ to education.

(see the answer key)

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