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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. Which term describes the purpose of federal spending?
(a) "Balance beam."
(b) None of the answers is correct.
(c) "Seesaw."
(d) "Balance wheel."

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

4. What is the basic problem of social life for Friedman?
(a) How to coordinate the economic activities of large numbers of individuals.
(b) How to provide for entertainment opportunities.
(c) How to tax and provide responsively for the people.
(d) How to distribute wealth equitably.

5. In Friedman's mind, why is centralization attractive to many?
(a) Consolidation of power.
(b) Government can promote the public interest.
(c) Better pool of resources.
(d) Streamlined services.

Short Answer Questions

1. Friedman states that government should be ______.

2. Friedman asserts that current liberalism is tied to the state management of ______.

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

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

5. Friedman advocates the end of ______.

(see the answer key)

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