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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. At the time of the book's publication, there was a tendency to regard government intervention as ______.
(a) Necessary.
(b) Detrimental.
(c) Desirable.
(d) Harmful.

2. What is the major reason Friedman asserts why government intervention has had the opposite of the intended effects?
(a) People attempt to promote their own interests.
(b) People in power only seek political gains.
(c) A wealthy few have made the majority of the decisions for the minority.
(d) People do not abide by the rules of the government.

3. One argument Friedman theorizes for Social Security is ______.
(a) The economics of incentives argument.
(b) The lost boys result.
(c) The neighborhood effect.
(d) Paternalism.

4. What is the key issue for Friedman with annuities?
(a) Compulsory purchase of annuities.
(b) Government issuance of annuities.
(c) Fulfilling the demand for annuities.
(d) Distributing the profits of annuities.

5. According to Friedman, who benefits from licensure?
(a) Aspirants.
(b) Customers.
(c) Clients.
(d) Licensed practitioners.

Short Answer Questions

1. Who said, "There is much ruin in a nation"?

2. Friedman advocates ______ income of the poor.

3. One threat Friedman believes to the preservation and expansion of freedom is ______.

4. Three levels of control are licensing, registration, and ______.

5. What is one method that governments have used to alter the distribution of income?

Short Essay Questions

1. What is the problem for Friedman with fair employment commission legislation?

2. What is occupational licensure?

3. Why is Friedman against fair employment laws?

4. What does Friedman assert that capitalism has done for inequalities?

5. According to Friedman, do monopolies have any sort of "social responsibility"?

6. What does Friedman believe are the effects of farm price supports?

7. What recommendations would Friedman give to a president about an economic downturn?

8. Where do you stand: are you on the liberal free market side or more on the government intervention side? Why?

9. What is Friedman's recommendation regarding an income tax?

10. In Chapter 13, Friedman summarizes his examples. Which do you agree with?

(see the answer keys)

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