|Name: _________________________||Period: ___________________|
This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.
Short Answer Questions
1. According to Friedman, the market enables wide diversity, meaning power can be located in ______.
2. Friedman argues against the theory that $100 in government spending will increase income by ______.
3. Friedman advocates that individuals should be able to buy and sell ______.
4. According to Friedman, whom does free trade benefit?
5. Friedman defines a country as a collection of ______.
Short Essay Questions
1. What example does Friedman use to illustrate his point about direct cash payments to those below a certain income level?
2. Explain "floating exchange rates."
3. What is the multiplier effect?
4. Friedman explains that the economic activities of large numbers of individuals can be coordinated. In what two ways?
5. Explain the externalities argument that Friedman describes for government involvement in education
6. What are the three sources of monopoly?
7. Who are the biggest advocates of occupational licensure that Friedman describes?
8. In Chapter 13, Friedman summarizes his examples. Which do you disagree with?
9. What is meant when Friedman states "Government as rule-maker and umpire"?
10. What does Friedman say about public housing as a form of social welfare?
Essay Topic 1
Friedman articulates that economic freedom is necessary for political freedom. Analyze the factors necessary for economic freedom to occur and explain where government intervention is appropriate.
Essay Topic 2
Chapter 7 is arguably Friedman's most controversial chapter because of his views of government intervention in discrimination. Friedman, the free market capitalist, believes that government should not have laws based on race and people should be free to shop, purchase, and hire wherever they choose. Analyze Friedman's argument and examine the historical examples he gives to support his opinion.
Essay Topic 3
Friedman describes the current international trade arrangements of his time. In Friedman's day, the value of currency was tied to the gold standard. This arrangement was known as the Bretton Woods system. Analyze this currency system. What is it? How did it work? What were the advantages and disadvantages of it? How does it compare with what we have in the present day?
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