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

Multiple Choice Questions

1. What does Friedman believe will markets do over time to monopolies?
(a) Strengthen them.
(b) Break them up.
(c) Make them obsolete.
(d) Separate them slowly.

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

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

4. In the market described by Friedman, exchanges between households are ______.
(a) Unwilling.
(b) Obligatory.
(c) Voluntary.
(d) Coerced.

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

6. One of Friedman's claims for government involvement in education asserts that there are ______ to education.
(a) Negative externalities.
(b) Positive externalities.
(c) Extreme costs.
(d) Minimal costs.

7. According to Friedman, it can be argued that private schools ______ class distinctions, and therefore need government intervention.
(a) Diminish.
(b) Increase.
(c) Maintain.
(d) Exacerbate.

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

9. 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) 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) When the Federal Reserve does well, only a few profit.

10. 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 neighborhood effect.
(b) The future growth principle.
(c) The common principle.
(d) The colleague effect.

11. For Friedman, what is an all-embracing ethic?
(a) Freedom.
(b) Religion.
(c) Education.
(d) Government.

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

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

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

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

Short Answer Questions

1. What does Friedman claim that governments abuse?

2. Friedman theorizes that in extreme cases where parents don't pay for schooling, the government could provide a ______.

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

4. The thought that the best use of government spending would be on useless projects is known as ______.

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

(see the answer keys)

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