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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 4, International and Financial Trade Arrangements.

Multiple Choice Questions

1. Friedman asserts that government is needed for the ______.
(a) "Rules of the citizens."
(b) "Rules of the system."
(c) "Rules of the road."
(d) "Rules of the game."

2. Which of the following can be justified by Friedman for government interventions?
(a) The draft.
(b) Minimum wage.
(c) Subsidizing farm production.
(d) Property rights.

3. Besides enforcing contracts, what one other thing does Friedman say government should do?
(a) Provide for public transportation.
(b) Protect against external threats.
(c) Secure a country's borders.
(d) Regulate commerce.

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

5. 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) Bolster.
(c) Strengthen.
(d) Undermine.

Short Answer Questions

1. What is the name of the system with the purpose of regulating monetary policy between leading countries?

2. In Friedman's opinion, what will check government power?

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

4. Friedman believes that free markets are not sufficient for political freedom since many countries demonstrate the possibility of ______.

5. What is the term for currency not being traded for any amount of another currency?

(see the answer key)

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