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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. Which of the following, for Friedman, is the most important factor for the Federal Reserve?

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

3. The thought that the best use of government spending would be on useless projects is known as ______.

4. How are decisions, for Friedman, made where unanimity is a costly way of making decisions?

5. Friedman's analysis of government argues that it is not ______.

Short Essay Questions

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

2. What reason does Friedman refute for government spending?

3. What is fiscal policy?

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

5. What is the multiplier effect?

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

7. What is the balance wheel theory?

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

9. Explain the paternalistic argument that Friedman describes for government involvement in education.

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

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Friedman discusses the role of government in education. He says that the government can require education because a democratic society cannot exist without a literate and informed population. Focusing on compulsory education, analyze the role of government in education.

Essay Topic 2

Friedman theorizes that actions taken by the government to reduce competition, restrict free choice and raise prices have a negative effect on society. Analyze the various forms of monopolies and what the government's role should be.

Essay Topic 3

Friedman argues against licensure in general. Examine Friedman's arguments against this topic and critique his examples.

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