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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) No one, they should be allowed to fluctuate on their own.
(b) The White House.
(c) The International Monetary Fund.
(d) The Federal Reserve.

2. What does Friedman prefer when it comes to exchange rates?
(a) Floating exchange rates.
(b) Rising exchange rates?
(c) Hovering exchange rates.
(d) Sinking exchange rates.

3. Which term refers to the government stimulating spending?
(a) "Prime the pump."
(b) "Charge the battery."
(c) "Grease the skids."
(d) "Rev the engine."

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

5. According to Friedman, what is the Federal Reserve lacking?
(a) A Constitution of sorts.
(b) A Rosetta Stone of sorts.
(c) A Magna Carta of sorts.
(d) A Declaration of Independence of sorts.

Short Answer Questions

1. According to Friedman, whom does free trade benefit?

2. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?

3. In Friedman's analysis, what century is the historical exception to most men living in tyranny, servitude, and misery?

4. What major event does Friedman strongly believe was a result of the government mishandling the money supply?

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

(see the answer key)

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