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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 11, Social Welfare Measures.

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

2. Friedman hypothesizes that the change from free market societies to economic controlled ones led classical liberals to worry that it would ______ political freedom.
(a) Weaken.
(b) Strengthen.
(c) Undermine.
(d) Bolster.

3. What does Friedman assert is an example of an appropriate task for government?
(a) Defining property rights.
(b) Providing for the social welfare.
(c) Regulating the job market.
(d) Determining price.

4. Friedman's belief is that what cause would free trade substantially promote, both domestically and internationally?
(a) Freedom.
(b) Political power.
(c) Currency exchange.
(d) Regulation.

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

Short Answer Questions

1. According to Friedman, what are licenses restrictions on?

2. Friedman claims there is no connection between equal treatment and what?

3. To what does Friedman equate competition?

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

5. What is the basic problem of social life for Friedman?

(see the answer key)

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