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

Multiple Choice Questions

1. The thought that the best use of government spending would be on useless projects is known as ______.
(a) "Filling holes."
(b) "Emptying the pot."
(c) "Steaming the water."
(d) "Evening it out."

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

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

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

5. In Friedman's opinion, what should individuals be allowed to do?
(a) Choose their own religion.
(b) Pursue their own ends.
(c) Elect their own leaders.
(d) Print their own money.

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

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

8. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.
(a) 1937-38.
(b) 1926-27.
(c) 1929-33.
(d) 1920-21.

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

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

11. Past and current definitions of liberalism are the same with respect to ______.
(a) Free markets and the rule of law.
(b) Civil freedoms and democracy.
(c) Distribution of wealth and the welfare state.
(d) Paternalism and individualism.

12. What does Friedman assert is an example of an appropriate task for government?
(a) Defining property rights.
(b) Regulating the job market.
(c) Determining price.
(d) Providing for the social welfare.

13. One solution Friedman proposes is to give parents ______ for schooling.
(a) Coupons.
(b) Tokens.
(c) Vouchers.
(d) Credits.

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

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

Short Answer Questions

1. What is the name of the system with the purpose of regulating monetary policy between leading countries?

2. What major event does Friedman strongly believe was a result of the government mishandling the money supply?

3. Friedman's belief is that what cause would free trade substantially promote, both domestically and internationally?

4. Which of the following, for Friedman, is the most important factor for the Federal Reserve?

5. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?

(see the answer keys)

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