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

Multiple Choice Questions

1. Which of the following is not an example of social welfare?
(a) Occupational licensure.
(b) Medicare.
(c) Minimum wage laws.
(d) Public housing.

2. For Friedman, what is the main argument for licensure?
(a) Racism.
(b) Materialism.
(c) Maternalism.
(d) Paternalism.

3. In Chapter 10, The Distribution of Income, what was the chief characteristic of progress and development over the past century?
(a) Advances in education.
(b) Advances in entertainment.
(c) Increae in leisure time.
(d) Advances in technology.

4. What is one disadvantage Friedman describes of programs to alleviate poverty?
(a) Fraud.
(b) Authorization.
(c) Funding.
(d) Administration.

5. What is one argument Friedman gives for public housing?
(a) The neighborhood effect.
(b) The law of supply effect.
(c) The law of demand effect.
(d) The paternalism effect.

6. Friedman simply states that to alleviate poverty, we should have a program directed at ______.
(a) Price subsidies.
(b) Providing work programs.
(c) Regulation of charitable giving.
(d) Helping the poor.

7. What industry sector is most prevalent in monopoly?
(a) Shipping.
(b) Manufacturing.
(c) Textile.
(d) Service.

8. Who does Friedman believe is most critical of capitalism?
(a) Marxists.
(b) Democrats.
(c) Socialists.
(d) Communists.

9. What is one example of a government supported monopoly?
(a) The coal industry.
(b) The postal service.
(c) The auto industry.
(d) The sugar cane industry.

10. In 1961, how much did the government spend on direct welfare payments and programs?
(a) $42 billion.
(b) $30 million.
(c) $45 million.
(d) $33 billion.

11. Another threat for Friedman to the preservation and expansion of freedom is:
(a) An internal threat of unfair political practices.
(b) An internal threat of licensure requirements.
(c) An internal threat of labor unions.
(d) An internal threat of government regulation.

12. Regarding certification, what does Friedman stress increases sales?
(a) Stringent certification controls.
(b) Certificates of authenticity.
(c) Word of mouth advertising.
(d) Good products that maintain good reputations.

13. What has been more potent for progress than the visible hand for retrogression according to Friedman?
(a) None of the answers is correct.
(b) Transparent hand.
(c) Hidden hand.
(d) Invisible hand.

14. According to Friedman, what are licenses restrictions on?
(a) The qualifications of those doing the hiring.
(b) The age of those who are licensed.
(c) Who may hire whom.
(d) What schools professionals may attend.

15. In what decades did intellectuals in the United States consider capitalism to be defective?
(a) 1920s and '30s.
(b) 1930s and '40s.
(c) 1900s and '10s.
(d) 1940s and '50s.

Short Answer Questions

1. What term describes the deliberate setting of prices through an agreement by firms?

2. Friedman states that ______ is a generator of inequality.

3. What is one method that governments have used to alter the distribution of income?

4. What does Friedman advocate the abolition of in Chapter 10, The Distribution of Income?

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

(see the answer keys)

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