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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. What is one way Friedman believes some people criticize markets?
(a) It hurts those in power.
(b) It inequitably distributes wealth.
(c) It limits people's choices.
(d) It gives people what they want.

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

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

4. Friedman believes that one governmental action that is justifiable is to set a ______ education level.
(a) Standard.
(b) Rational.
(c) Maximum.
(d) Minimum.

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

Short Answer Questions

1. What does Friedman assert is an example of an appropriate task for government?

2. In Friedman's analysis, what century is the historical exception to most men living in tyranny, servitude, and misery?

3. Friedman believes that all of the following are appropriate for fiscal policy except ______.

4. Friedman's theory on government intervention is that government is needed to be what regarding disputes?

5. According to Friedman, the market enables wide diversity, meaning power can be located in ______.

Short Essay Questions

1. Friedman explains that the economic activities of large numbers of individuals can be coordinated. In what two ways?

2. What is Friedman's recommendation to the Federal Reserve System?

3. What is the modern day definition of liberalism?

4. What are Friedman's recommendations in order for stocks to become self-regulating?

5. What is the multiplier effect?

6. Does Friedman believe that most societies have been free or not free?

7. What examples does Friedman give of when the Federal Reserve System mismanaged the money supply?

8. What is fiscal policy?

9. What reason does Friedman refute for government spending?

10. Explain the paternalistic argument that Friedman describes for government involvement in education.

(see the answer keys)

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