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

2. For Friedman, where is the best place for power to be held?

3. In the market described by Friedman, exchanges between households are ______.

4. What does Friedman claim that governments abuse?

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

Short Essay Questions

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

2. Explain the price system as described by Friedman.

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

4. What is the multiplier effect?

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

6. According to Friedman, what is the difference between schooling and education? What does the government do?

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

8. What reason does Friedman refute for government spending?

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

10. What is the neighborhood effect?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Friedman argues that government mishandling of the money supply produced the Great Depression. Examine Friedman's analysis of the Great Depression and determine if the Federal Reserve System caused the Great Depression.

Essay Topic 2

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.

Essay Topic 3

Friedman makes a clear distinction between the historical usage of the term liberal and the present day definition. Compare and contrast the different uses of the term liberal.

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