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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. One role of government argued by the New Deal was to ______.

2. Which of the following cannot be justified by Friedman for government interventions?

3. According to Friedman, what is lost when foreign exchange is controlled by the government?

4. According to Friedman, what is a necessary condition for political freedom?

5. What term refers to the argument for education that parents will not do best for their children?

Short Essay Questions

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

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

3. What reason does Friedman refute for government spending?

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

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

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

7. What is the balance wheel theory?

8. Friedman explains that the economic activities of large numbers of individuals can be coordinated. In what two ways?

9. What is the multiplier effect?

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

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 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 3

Chapter 7 is arguably Friedman's most controversial chapter because of his views of government intervention in discrimination. Friedman, the free market capitalist, believes that government should not have laws based on race and people should be free to shop, purchase, and hire wherever they choose. Analyze Friedman's argument and examine the historical examples he gives to support his opinion.

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