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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 3, The Control of Money.

Multiple Choice Questions

1. What does Friedman believe coordinates individuals over vast distances and across all belief systems?
(a) The price system.
(b) The electoral system.
(c) The educational system.
(d) The geographic system.

2. Friedman advocates that government should not be a master, but a/an ______.
(a) Mechanism.
(b) Instrument.
(c) Slave.
(d) Philosophy.

3. What is one example of a negative externality?
(a) Lack of voting.
(b) Pollution.
(c) Private education.
(d) Welfare.

4. What does Friedman believe is one drawback of the Federal Reserve having so much power?
(a) The Federal Reserve chairperson is elected and therefore subject to the whims of the public.
(b) The Federal Reserve has rules that are too strict to follow in order to make any real change.
(c) When the Federal Reserve does well, only a few profit.
(d) When the Federal Reserve makes mistakes, the whole country suffers.

5. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?
(a) Executive decision.
(b) Majority rule.
(c) A system of checks and balances.
(d) Decisions by committee.

Short Answer Questions

1. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.

2. According to Friedman, what is the Federal Reserve lacking?

3. According to Friedman, what is a necessary condition for political freedom?

4. What does Friedman assert is an example of an appropriate task for government?

5. For Friedman, what is something that when privately owned can be used if the price is right?

(see the answer key)

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