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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 the market described by Friedman, exchanges between households are ______.
(a) Voluntary.
(b) Obligatory.
(c) Coerced.
(d) Unwilling.

2. Friedman asserts that government is needed for the ______.
(a) "Rules of the system."
(b) "Rules of the road."
(c) "Rules of the game."
(d) "Rules of the citizens."

3. Friedman asserts that current liberalism is tied to the state management of ______.
(a) The educational system.
(b) The economy.
(c) Social welfare.
(d) The electoral vote.

4. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?
(a) Postal service.
(b) Education.
(c) National defense.
(d) Healthcare.

5. Friedman's evidence suggests that for every $100 of government spending, a certain amount is added to income. How much?
(a) $300.
(b) $50.
(c) $100.
(d) $150.

Short Answer Questions

1. For Friedman, where is the best place for power to be held?

2. According to Friedman, what is lost when foreign exchange is controlled by the government?

3. One argument for government spending that Friedman refutes is that it will reduce what?

4. What caused all the major nations to abandon the gold standard?

5. For Friedman, what is something that when privately owned can be used if the price is right?

Short Essay Questions

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

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

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

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

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

6. According to Friedman what is the role of government?

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

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

9. Explain the price system as described by Friedman.

10. Explain Friedman's voucher proposal.

(see the answer keys)

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