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

Multiple Choice Questions

1. What term refers to the argument for education that parents will not do best for their children?
(a) Employment.
(b) Sacrificial.
(c) Paternalistic.
(d) Maternalistic.

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

3. What is the basic problem of social life for Friedman?
(a) How to provide for entertainment opportunities.
(b) How to coordinate the economic activities of large numbers of individuals.
(c) How to distribute wealth equitably.
(d) How to tax and provide responsively for the people.

4. Who does Friedman think should set exchange rates?
(a) No one, they should be allowed to fluctuate on their own.
(b) The Federal Reserve.
(c) The International Monetary Fund.
(d) The White House.

5. Friedman states that government should be ______.
(a) Destroyed.
(b) Held accountable.
(c) Expanded.
(d) Limited.

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

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

8. Friedman makes the distinction between education and ______.
(a) Aging.
(b) Schooling.
(c) Instruction.
(d) Income.

9. What does Friedman prefer when it comes to exchange rates?
(a) Sinking exchange rates.
(b) Rising exchange rates?
(c) Hovering exchange rates.
(d) Floating exchange rates.

10. Which of the following, for Friedman, is the most important factor for the Federal Reserve?
(a) Regulation of the market.
(b) Economic growth.
(c) Loans and lending practices.
(d) Stability.

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

12. Friedman advocates that individuals should be able to buy and sell ______.
(a) Silver.
(b) Stocks.
(c) Foreign currency.
(d) Gold.

13. Friedman believes that free markets are not sufficient for political freedom since many countries demonstrate the possibility of ______.
(a) Economic freedom.
(b) Laissez-faire markets.
(c) Authoritarian capitalism.
(d) Dictatorial government.

14. According to Friedman, what cannot exist without a literate and informed population?
(a) First world countries.
(b) A progressive political system.
(c) A well-armed militia.
(d) Democratic societies.

15. Friedman points out one idea that is often forgotten is that political and economic institutions have been ______.
(a) Autonomic.
(b) Unfree.
(c) Free.
(d) Suppressed.

Short Answer Questions

1. What does Friedman say can government not duplicate?

2. Which term describes the purpose of federal spending?

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

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

5. For Friedman, what is an all-embracing ethic?

(see the answer keys)

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