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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 believes that vocational and professional schools should be totally ______ run.

2. What is one example of a negative externality?

3. What does Friedman use as an example of a use of government where individuals cannot consume individual amounts?

4. In Friedman's opinion, what will check government power?

5. What does Friedman believe is one drawback of the Federal Reserve having so much power?

Short Essay Questions

1. Explain how international currency rates have changed since 1900.

2. What examples does Friedman give of appropriate roles of government in a free society?

3. Explain the externalities argument that Friedman describes for government involvement in education

4. Explain "floating exchange rates."

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

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

7. What examples does Friedman give of when the Federal Reserve System mismanaged the money supply?

8. How does Friedman explain government's role in a free society?

9. How does Friedman argue that floating exchange rates can affect international trade?

10. What is the modern day definition of liberalism?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Friedman uses two reasons to justify government intervention: the neighborhood effect and paternalism. Analyze these reasons and determine whether they are sufficient justifications for government intervention.

Essay Topic 2

What is Friedman's stance on social welfare? Using examples from the text, explain his position and then advocate or rebut his position.

Essay Topic 3

Friedman makes a clear distinction between the historical usage of the term liberal and the present day definition. Compare and contrast the different uses of the term liberal.

(see the answer keys)

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