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

2. Friedman advocates the end of ______.
(a) Export quotas.
(b) Exchange rates.
(c) The free market.
(d) Capitalism.

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

4. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?
(a) Education.
(b) Healthcare.
(c) National defense.
(d) Postal service.

5. For Friedman, what is an all-embracing ethic?
(a) Freedom.
(b) Religion.
(c) Education.
(d) Government.

Short Answer Questions

1. Which of the following cannot be justified by Friedman for government interventions?

2. Friedman uses the example of selling ______ to demonstrate a true global economy.

3. Friedman believes that economic control can lead to infringements on ______.

4. What does Friedman believe is one drawback of the Federal Reserve having so much power?

5. Friedman points out one idea that is often forgotten is that political and economic institutions have been ______.

(see the answer key)

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