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

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

3. What does Friedman believe is one drawback of the Federal Reserve having so much power?
(a) When the Federal Reserve makes mistakes, the whole country suffers.
(b) When the Federal Reserve does well, only a few profit.
(c) The Federal Reserve has rules that are too strict to follow in order to make any real change.
(d) The Federal Reserve chairperson is elected and therefore subject to the whims of the public.

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

5. Which of the following does Friedman dispute?
(a) A free market economic system works.
(b) Government should stay out of individual economic choices.
(c) The gold standard for backing money is good.
(d) The Central Bank holds too much power.

Short Answer Questions

1. What does Friedman believe needs protection in order for the freedom of the market to arise?

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

3. What major event does Friedman strongly believe was a result of the government mishandling the money supply?

4. Friedman states that the problem with teacher salaries is not that they are too low, but that they are ______.

5. Friedman hypothesizes that the change from free market societies to economic controlled ones led classical liberals to worry that it would ______ political freedom.

Short Essay Questions

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

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

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

4. What is the balance wheel theory?

5. What reason does Friedman refute for government spending?

6. What is meant by "paternalistic grounds"?

7. According to Friedman, what is the difference between schooling and education? What does the government do?

8. What does Friedman believe to be the cause of the Great Depression?

9. Explain the price system as described by Friedman.

10. What is the multiplier effect?

(see the answer keys)

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