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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. According to Friedman, what is one unknown negative effect of farm subsidies?
(a) Increase in production of cotton.
(b) An emphasis on educational testing.
(c) A removal of three senate seats.
(d) A hindrance to the pursuit of foreign policy.

2. Which group does Friedman believe to be contradictory in their views on free speech and fair employment laws?
(a) ACLU.
(b) ACSA.
(c) NAACP.
(d) FCC.

3. Friedman states that ______ is a generator of inequality.
(a) Redistribution.
(b) Unemployment.
(c) Taxation.
(d) Social security.

4. Friedman gives examples of successful government intervention except ______.
(a) School system.
(b) The income tax.
(c) Magnificent dams.
(d) Sherman antitrust laws.

5. What is one example Friedman uses to demonstrate his point on monopoly in industry?
(a) Steel vs. shipping industry.
(b) Entertainment vs. telecommunication industry.
(c) Automobile vs. wholesale industry.
(d) Textile vs. production industry.

Short Answer Questions

1. What is one disadvantage Friedman describes of programs to alleviate poverty?

2. Friedman hypothesizes that there has been a change in discrimination along with the rise of capitalism because ______.

3. In 1961, how much did the government spend on direct welfare payments and programs?

4. What does FEPC stand for?

5. For Friedman, what is one major problem in interpreting the evidence on the distribution of income?

Short Essay Questions

1. Friedman accepts the reasoning that justifies "governmental action to alleviate poverty" (p. 191). What two issues must be addressed in order for this to happen?

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

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

4. In Chapter 13, Friedman summarizes his examples. Which do you disagree with?

5. What are the three primary forms of monopoly?

6. What is occupational licensure?

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

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

9. What are the three sources of monopoly?

10. What is the progressive income tax?

(see the answer keys)

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