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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. An exchange rate is the:

2. The economy functions on the basis of:

3. Free international trade results in better relations between individuals who differ in all but:

4. Protection refers to:

5. The Great Depression began in:

Short Essay Questions

1. England has a successful National Health Service that many people think the United States should have. What are the problems with the British program?

2. What are the three functions of prices?

3. Which two New Deal programs were declared unconstitutional?

4. What is meant by equality of outcome?

5. What good does Friedman use as an example of voluntary exchange?

6. Which of the three kinds of equality causes a conflict with liberty?

7. How has the concept of equality changed over time?

8. What did Thomas Jefferson mean when he wrote of equality?

9. What happens if there in interference with prices?

10. What is a restriction of payments?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

In spite of the theory saying that free trade is best, there are many trade barriers, like tariffs on imports or exports, import and export quotas,etc. What are the effects of these trade barriers? Why do nations impose them?

Essay Topic 2

Think about the topics covered in the book. Select an area that you are interested in and discuss and evaluate it. Do you agree or disagree with Friedman? Why or why not?

Essay Topic 3

Explain the purpose of regulation? Does it serve that purpose? What have been the economics effects of regulation? Have they been good or bad?

(see the answer keys)

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