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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Friedman states that government should be ______.
(a) Decentralized.
(b) Consolidated.
(c) Incorporated.
(d) Streamlined.

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

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

4. According to Friedman, what is lost when foreign exchange is controlled by the government?
(a) Political freedom.
(b) Economic freedom.
(c) Educational freedom.
(d) Religious freedom.

5. In Friedman's time, what was illegal to buy or sell?
(a) Ethanol.
(b) Gold.
(c) Alcohol.
(d) Silver.

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

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

8. In Friedman's eyes, individual activities correspond to game players as the framework of law corresponds to______.
(a) Leaders of the game.
(b) Players of the game.
(c) Finishers of the game.
(d) Rulers of the game.

9. The original balancing thought is based on whose economic philosophy?
(a) Keynes.
(b) Krugman.
(c) Smith.
(d) Marx.

10. A common misunderstanding of economic freedom, according to Friedman, is that it emphasizes ______.
(a) Wealth.
(b) Materialism.
(c) Socialism.
(d) Prosperity.

11. Which of the following does Friedman dispute?
(a) A free market economic system works.
(b) The gold standard for backing money is good.
(c) Government should stay out of individual economic choices.
(d) The Central Bank holds too much power.

12. Friedman asserts that current liberalism is tied to the state management of ______.
(a) The economy.
(b) Social welfare.
(c) The educational system.
(d) The electoral vote.

13. According to Friedman, what is liberty's greatest enemy?
(a) The educational system.
(b) The Federal government.
(c) Elected leaders.
(d) Concentration of power.

14. One argument for government spending that Friedman refutes is that it will reduce what?
(a) Unemployment.
(b) Crime.
(c) Fraud.
(d) Competition.

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

Short Answer Questions

1. According to Friedman, what conflicts with one another for men?

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

3. Which of the following cannot be justified by Friedman for government interventions?

4. Friedman's analysis of government argues that it is not ______.

5. What is the basic problem of social life for Friedman?

(see the answer keys)

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