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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. What term refers to the Federal Reserve's ability to produce more money than is deposited?
(a) Percent fulfillment banking.
(b) Reserve ability production.
(c) Fractional reserve banking.
(d) Overdraft protection.

2. Past and current definitions of liberalism are the same with respect to ______.
(a) Civil freedoms and democracy.
(b) Distribution of wealth and the welfare state.
(c) Paternalism and individualism.
(d) Free markets and the rule of law.

3. A major point for Friedman is that politics and economics are not ______.
(a) Together.
(b) Separate.
(c) Autonomous.
(d) United.

4. According to Friedman, what conflicts with one another for men?
(a) Religious beliefs.
(b) Economic interests.
(c) Political ideology.
(d) Absolute freedom.

5. Friedman argues against the theory that $100 in government spending will increase income by ______.
(a) $300.
(b) $150.
(c) $50.
(d) $100.

Short Answer Questions

1. What is one way Friedman believes some people criticize markets?

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

3. Originally, liberalism fought for freedom of thought, free-markets, free trade, constitutionalism, representative government, and ______.

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

5. One argument for government spending that Friedman refutes is that it will reduce what?

(see the answer key)

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