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. According to the author in Chapter 7, the basic set of rules and investor should follow is to do what?
(a) Research, invest, watch.
(b) Save, invest, and repeat.
(c) Invest, watch, sell.
(d) Research, fact check, invest.

2. Michael Jensen refers to company stock options as what in Chapter 2?
(a) "Managerial heroin."
(b) "A trough of money."
(c) "Cocaine for businessmen."
(d) "Wall Streets marijuana."

3. In finance, what is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future delivery date?
(a) Futures contract.
(b) Asset allocation.
(c) Supply and demand.
(d) Business cycle.

4. The Cuban Revolution deposed what dictator?
(a) Fidel Castro.
(b) Roberto Goizueta.
(c) Nicholas Sarkozy.
(d) Fulgencio Batista.

5. According to the author, insurance companies want to save money while doctors want to help patients and avoid what?
(a) Spreading diseases.
(b) Losing their medical license.
(c) Getting sued.
(d) Unnecessary fatalities.

6. What refers to the increasingly global relationships of culture, people and economic activity?
(a) Slavery.
(b) Consolidation.
(c) Monopoly.
(d) Globalization.

7. According to Burton G. Malkiel in the Forward, economists often don't show a connection to what?
(a) Everyday life.
(b) Mathematics.
(c) Wall Street.
(d) Statistics.

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

9. What is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect?
(a) Legislation.
(b) Per capita.
(c) Trade-off.
(d) Adverse selection.

10. In Chapter 2, the author discusses how the black rhinoceros is nearly extinct and that the horns are considered what?
(a) An aphrodesiac.
(b) An alkaloid.
(c) An evil potion.
(d) A poison.

11. In what political structure does the government set the price and decide what's on the shelves?
(a) Capitalism.
(b) Marxism.
(c) Utopianism.
(d) Communism.

12. The Lehman Brothers bank problem in 2008 occurred because the banks weren't what, according to the author?
(a) Analyzing risk.
(b) Keeping enough money on hand.
(c) Paying out interest.
(d) Using their own money.

13. In Chapter 6, the author discusses poverty and income equality, using the example of what billionaire?
(a) Fidel Castro.
(b) Donald Trump.
(c) Bill Gates.
(d) Ted Turner.

14. 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) Adverse selection.
(b) Futures contract.
(c) Asset allocation.
(d) Money market.

15. According to the author in Chapter 3, it's up to whom to consider the broad social consequences of decisions In a market economy?
(a) Corporations.
(b) The government.
(c) Nonprofit organizations.
(d) Religious institutions.

Short Answer Questions

1. What is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets?

2. When was the Hope credit established?

3. OPEC has maintained its headquarters where since 1965?

4. According to the author, financial markets boil down to four basic simple needs. What is the second discussed in Chapter 7?

5. Douglas Ivester's goal was achieving what when he told his sales team to pass free Coca-Cola around as the Berlin Wall toppled?

(see the answer keys)

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