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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. In Friedman's opinion, what will check government power?
(a) A free market.
(b) A strong judicial system.
(c) A tripartite government.
(d) The people.

2. What does Friedman believe will become self-regulating?
(a) The gold standard.
(b) The World Bank.
(c) Monetary stocks.
(d) Exchange rates.

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

4. Which type of education does Friedman not advocate the government paying for?
(a) Vocational.
(b) Industrial.
(c) Minimal.
(d) Liberal.

5. What is the name of the system with the purpose of regulating monetary policy between leading countries?
(a) The Gold Standard System.
(b) The World Bank System.
(c) The Bretton Woods System.
(d) The International Monetary System.

Short Answer Questions

1. By Friedman's account, the market permits unanimity without ______.

2. Past and current definitions of liberalism are the same with respect to ______.

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

4. What does Friedman say can government not duplicate?

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

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 meant by "paternalistic grounds"?

3. What is the relationship Friedman describes between economic freedom and political freedom?

4. Explain Friedman's voucher proposal.

5. Concerning business cycles that Friedman explains, what is one role of government?

6. Explain the price system as described by Friedman.

7. What is fiscal policy?

8. What is the neighborhood effect?

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

10. How does Friedman argue that floating exchange rates can affect international trade?

(see the answer keys)

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