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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 points out one idea that is often forgotten is that political and economic institutions have been ______.

2. Friedman's belief is that what cause would free trade substantially promote, both domestically and internationally?

3. Besides enforcing contracts, what one other thing does Friedman say government should do?

4. Which term describes the purpose of federal spending?

5. Friedman's theory is that monetary exchange rates will allow trades across countries to ______ in accord with those rates.

Short Essay Questions

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

2. Explain Friedman's voucher proposal.

3. What reason does Friedman refute for government spending?

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

5. According to Friedman what is the role of government?

6. What is the multiplier effect?

7. What is fiscal policy?

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

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

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

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 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 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.

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