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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. What is the name of the system with the purpose of regulating monetary policy between leading countries?

2. For Friedman, what is something that when privately owned can be used if the price is right?

3. According to Friedman, the market enables wide diversity, meaning power can be located in ______.

4. According to Friedman, what cannot exist without a literate and informed population?

5. What does Friedman prefer when it comes to exchange rates?

Short Essay Questions

1. What was the definition of liberalism prior to 1900?

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

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

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

5. What is the balance wheel theory?

6. What is the relationship Friedman describes between economic freedom and political freedom?

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

8. What is the modern day definition of liberalism?

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

10. What is the multiplier effect?

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 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.

(see the answer keys)

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