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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 5, Fiscal Policy.

Multiple Choice Questions

1. Friedman asserts that current liberalism is tied to the state management of ______.
(a) The educational system.
(b) The electoral vote.
(c) The economy.
(d) Social welfare.

2. What caused all the major nations to abandon the gold standard?
(a) World War II.
(b) World War I.
(c) Decline in the value of gold.
(d) The Great Depression.

3. The thought that the best use of government spending would be on useless projects is known as ______.
(a) "Filling holes."
(b) "Emptying the pot."
(c) "Steaming the water."
(d) "Evening it out."

4. Who does Friedman think should set exchange rates?
(a) No one, they should be allowed to fluctuate on their own.
(b) The White House.
(c) The International Monetary Fund.
(d) The Federal Reserve.

5. In Friedman's opinion, what will check government power?
(a) A strong judicial system.
(b) A free market.
(c) A tripartite government.
(d) The people.

Short Answer Questions

1. What does Friedman believe needs protection in order for the freedom of the market to arise?

2. What term refers to the Federal Reserve's ability to produce more money than is deposited?

3. What does Friedman believe coordinates individuals over vast distances and across all belief systems?

4. What does Friedman believe will markets do over time to monopolies?

5. A key component of the government spending is the ______.

(see the answer key)

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