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This quiz consists of 5 multiple choice and 5 short answer questions through Chapter 11, Social Welfare Measures.

Multiple Choice Questions

1. What is the term for currency not being traded for any amount of another currency?
(a) Unconvertible.
(b) Inconvertible.
(c) Irreversible.
(d) None of the answers is correct.

2. Friedman's theory on government intervention is that government is needed to be what regarding disputes?
(a) Umpire.
(b) Fan.
(c) Announcer.
(d) Groundskeeper.

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

4. What term refers to the circumstance under which the action of one individual imposes significant costs on other individuals for which it is not feasible to make him compensate them?
(a) The future growth principle.
(b) The neighborhood effect.
(c) The common principle.
(d) The colleague effect.

5. Originally, liberalism fought for freedom of thought, free-markets, free trade, constitutionalism, representative government, and ______.
(a) Fair trade.
(b) The rule of law.
(c) A welfare state.
(d) Rights of the poor.

Short Answer Questions

1. Friedman theorizes compulsory purchase of annuities has imposed ______ costs for ______ gains.

2. Instead of government spending, what does Friedman advocate the government use to stabilize the economy?

3. Friedman advocates the end of ______.

4. Friedman's theory is that monetary exchange rates will allow trades across countries to ______ in accord with those rates.

5. Friedman's evidence suggests that for every $100 of government spending, a certain amount is added to income. How much?

(see the answer key)

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