Capitalism and Freedom Test | Mid-Book Test - Hard

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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. Friedman theorizes that in extreme cases where parents don't pay for schooling, the government could provide a ______.

2. Friedman asserts that the Federal Reserve created the major contractions of the following years except______.

3. Originally, liberalism fought for freedom of thought, free-markets, free trade, constitutionalism, representative government, and ______.

4. Who does Friedman think should set exchange rates?

5. What is the name of the system with the purpose of regulating monetary policy between leading countries?

Short Essay Questions

1. What is fiscal policy?

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

3. What are Friedman's recommendations in order for stocks to become self-regulating?

4. What is the neighborhood effect?

5. What is meant when Friedman states "Government as rule-maker and umpire"?

6. What is the modern day definition of liberalism?

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

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

9. Explain Friedman's voucher proposal.

10. According to Friedman, what is the difference between schooling and education? What does the government do?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Friedman published "Capitalism and Freedom" in 1962. It is one of Friedman's attempts to spread free-market ideas to the public at large. The book advocates a number of free-market proposals, many of which, such as floating exchange rates and flat taxes, are implemented across the world today and seem commonplace. However, many of his more radical ideas remain controversial, such as school vouchers, or are totally ignored, like ending occupational licensure. In an essay, examine the historical context of Friedman's work and analyze the major movements of the time that may have influenced his views.

Essay Topic 2

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?

Essay Topic 3

What is the balance wheel theory of intervention? What is Friedman's view on it?

(see the answer keys)

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