Naked Economics: Undressing the Dismal Science Test | Mid-Book Test - Easy

Charles Wheelan
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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What refers to a market where prices are determined by supply and demand?
(a) Free market.
(b) Random market.
(c) Controlled market.
(d) Influx market.

2. What is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames?
(a) Index fund.
(b) Money market.
(c) Mutual fund.
(d) Floating exchange rate.

3. Gary Becker figured that the stock of skills, education, training and an individual's health constitutes about what percent of a modern economy's wealth?
(a) 75.
(b) 60.
(c) 42.
(d) 35.

4. In an insurance policy, what is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses?
(a) Subsidy.
(b) Collateral.
(c) Inflation.
(d) Deductible.

5. According to the author, there are two lessons to be learned from a monopoly situation. What is the second?
(a) Governments should maintain the financial infrastructure more.
(b) Government shouldn't provide any service that could be covered by the private sector.
(c) Governments should provide more services.
(d) Government shouldn't actually do the work of maintaining infrastructure.

6. When did Ross Perot found Electronic Data Systems?
(a) 1977.
(b) 1971.
(c) 1962.
(d) 1955.

7. According to the author, financial markets boil down to four basic simple needs. What is the second discussed in Chapter 7?
(a) Insuring against risk.
(b) Raising capital.
(c) Speculation.
(d) Storing, protecting and making profitable use of excess capital.

8. Burton G. Malkiel is an American economist, most famous for what classic finance book?
(a) Extreme Money: Masters of the Universe and the Cult of Risk.
(b) The Millionaire Next Door: The Surprising Secrets of America's Wealthy.
(c) A Random Walk Down Wall Street.
(d) The Wall Street MBA: Your Personal Crash Course in Corporate Finance.

9. Behavioral economics intertwine economics and what?
(a) Psychology.
(b) Religion.
(c) Geography.
(d) Geometry.

10. What is an investment position intended to offset potential losses that may be incurred by a companion investment?
(a) Deductible.
(b) Hedge.
(c) Futures contract.
(d) Bond.

11. What is a collective investment scheme that aims to replicate the movements of an index of a specific financial market regardless of market conditions?
(a) Public policy.
(b) Money market.
(c) Futures contract.
(d) Index fund.

12. What refers to the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value?
(a) Futures contract.
(b) Differential equation.
(c) Index fund.
(d) Human capital.

13. What is a mathematical equation for an unknown function of one or several variables that relates the values of the function itself and its derivatives of various orders?
(a) Depression equation.
(b) Derivative equation.
(c) Deductive equation.
(d) Differential equation.

14. What, according to the author, motivates talented teachers to leave to go onto other professions?
(a) Supply and demand.
(b) Capitalism.
(c) Legislation.
(d) The uniform pay scale.

15. What is an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investors risk tolerance, goals and investment time frame?
(a) Asset allocation.
(b) Money market.
(c) Futures contract.
(d) Adverse selection.

Short Answer Questions

1. OPEC has maintained its headquarters where since 1965?

2. Gary Becker was awarded the Nobel Memorial Prize in Economic Sciences in what year?

3. In economics and sociology, what refers to any factor that enables or motivates a particular course of action or counts as a reason for preferring one choice to the alternatives?

4. Ross Perot ran for President of the United States in what year?

5. When was Gary Becker born?

(see the answer keys)

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