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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. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?
(a) Majority rule.
(b) Decisions by committee.
(c) Executive decision.
(d) A system of checks and balances.

2. Friedman asserts that government restriction centralizes ______.
(a) Power.
(b) Elitism.
(c) Wealth.
(d) Goods.

3. Friedman believes that government that has the power to do good, also has the power to do ______.
(a) Wrong.
(b) Right.
(c) Bad.
(d) Nothing.

4. Friedman believes that all of the following are appropriate for fiscal policy except ______.
(a) Planning for stable tax rates.
(b) Fluctuating in spending based on the political climate.
(c) Spending based on community priorities.
(d) Avoiding erratic changes in spending.

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

Short Answer Questions

1. Which of the following can be justified by Friedman for government interventions?

2. Friedman's theory is that monetary exchange rates will allow trades across countries to ______ in accord with those rates.

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

4. In Friedman's mind, why is centralization attractive to many?

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

Short Essay Questions

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

2. Explain the price system as described by Friedman.

3. What examples does Friedman give of appropriate roles of government in a free society?

4. What is fiscal policy?

5. Explain how international currency rates have changed since 1900.

6. What was the definition of liberalism prior to 1900?

7. What is the modern day definition of liberalism?

8. What is the multiplier effect?

9. What does Friedman think of the remark, "Ask not what your country can do for you, ask what you can do for your country"?

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

(see the answer keys)

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