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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 theorizes compulsory purchase of annuities has imposed ______ costs for ______ gains.
(a) Social, political.
(b) Minimal, moderate.
(c) Little, large.
(d) Large, little.

2. What does FEPC stand for?
(a) Future Exercises for Preventing Catastrophes.
(b) Fixing Economic Policy for Capitalism.
(c) Fair Employment Practice Commission.
(d) Finding Education and People Cooperatively.

3. Three levels of control are licensing, registration, and ______.
(a) Certification.
(b) Initiation.
(c) Recognition.
(d) Acceptance.

4. What effect has Friedman observed that public housing has had on juvenile delinquency?
(a) Spread it out.
(b) Increased it.
(c) Reduced it.
(d) Maintained it.

5. According to Friedman, Social security measures were enacted to make receipt of assistance a matter of ______.
(a) Right.
(b) Paperwork.
(c) Principle.
(d) Authority.

Short Answer Questions

1. What is the relationship between capitalism and the fraction of income paid for capital in countries?

2. According to Friedman, what is one unknown negative effect of farm subsidies?

3. According to Friedman, who benefits from licensure?

4. What example does Friedman give for one argument for registration?

5. In what decades did intellectuals in the United States consider capitalism to be defective?

Short Essay Questions

1. What are the three primary forms of monopoly?

2. Why does Friedman reject "right to work" laws?

3. What are two problems with monopolies for the liberal?

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

5. Do you agree or disagree with Friedman's flat tax proposal?

6. What example does Friedman use to illustrate his point about direct cash payments to those below a certain income level?

7. What is the progressive income tax?

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

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

10. According to Friedman, is there any justification for government intervention when it comes to distributing wealth?

(see the answer keys)

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