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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 advocates that government should not be a master, but a/an ______.
(a) Philosophy.
(b) Mechanism.
(c) Slave.
(d) Instrument.

2. Besides enforcing contracts, what one other thing does Friedman say government should do?
(a) Provide for public transportation.
(b) Protect against external threats.
(c) Secure a country's borders.
(d) Regulate commerce.

3. For Friedman, where is the best place for power to be held?
(a) In the states.
(b) In the local community.
(c) At the federal level.
(d) In the economic system.

4. Which of the following cannot be justified by Friedman for government interventions?
(a) Free speech.
(b) Public parks.
(c) Vouchers for education.
(d) Roads.

5. What does Friedman believe is one drawback of the Federal Reserve having so much power?
(a) When the Federal Reserve makes mistakes, the whole country suffers.
(b) The Federal Reserve has rules that are too strict to follow in order to make any real change.
(c) The Federal Reserve chairperson is elected and therefore subject to the whims of the public.
(d) When the Federal Reserve does well, only a few profit.

Short Answer Questions

1. In the market described by Friedman, exchanges between households are ______.

2. In Chapter 3, what does Friedman provide a history of?

3. Which term refers to the government stimulating spending?

4. Friedman asserts that government is needed for the ______.

5. Friedman believes that all of the following are appropriate for fiscal policy except ______.

(see the answer key)

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