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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's evidence suggests that for every $100 of government spending, a certain amount is added to income. How much?

2. One question Friedman asks is how we can stop government from destroying ______.

3. According to Friedman, what is liberty's greatest enemy?

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

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

Short Essay Questions

1. Explain "floating exchange rates."

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

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

4. Why does Friedman believe government power should be limited?

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

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

7. What is the balance wheel theory?

8. What is Friedman's definition of political freedom? Of economic freedom?

9. What reason does Friedman refute for government spending?

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Friedman disagrees with the multiplier effect, a Keynesian theory, reasoning for government spending. Analyze the multiplier effect and examine the man who propagates the theory, John Maynard Keynes.

Essay Topic 2

Friedman advocates for the end of the progressive income tax in favor of a flat tax. Why is he against the progressive income tax? What are the benefits to a flat tax? In an essay, analyze Friedman's claims on the progressive income tax.

Essay Topic 3

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.

(see the answer keys)

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