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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 state rejects the view that the government is the patron or master of the citizenry?
(a) The free man.
(b) The educated man.
(c) The poor man.
(d) The rich man.

2. What caused all the major nations to abandon the gold standard?
(a) Decline in the value of gold.
(b) The Great Depression.
(c) World War II.
(d) World War I.

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

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

5. Friedman's analysis of government argues that it is not ______.
(a) Reductionary.
(b) Stagnantary.
(c) Contractionary.
(d) Expansionary.

Short Answer Questions

1. What is the term for currency not being traded for any amount of another currency?

2. Who does Friedman think should set exchange rates?

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

4. In Friedman's opinion, what will check government power?

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

(see the answer key)

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