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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 argues against the theory that $100 in government spending will increase income by ______.

2. Friedman advocates that government should not be a master, but a/an ______.

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

4. Friedman believes that all of the following are appropriate for fiscal policy except ______.

5. Friedman asserts that government restriction centralizes ______.

Short Essay Questions

1. What is the neighborhood effect?

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

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

4. Where does Friedman believe power in government should be located?

5. What does Friedman think of the remark, "Ask not what your country can do for you, ask what you can do for your country"?

6. What is Friedman's recommendation to the Federal Reserve System?

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

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

9. What does Friedman believe to be the cause of the Great Depression?

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

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

After describing the current international trade situation regarding government regulation of exchange rates and the price of gold, Friedman goes on to explain his free market solution. What is Friedman's solution? What are the positives and negatives with it? In your opinion, do you think it would work?

Essay Topic 3

Friedman condemns charitable giving by corporations and argues that they have no social responsibility. Determine if this is economically sound and true in today's society. Do you agree with Friedman's position?

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