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This quiz consists of 5 multiple choice and 5 short answer questions through Chapters 4-7.

Multiple Choice Questions

1. 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) Supply and demand.
(b) Business cycle.
(c) Asset allocation.
(d) Futures contract.

2. What are negative results which occur while trying to achieve a goal for the common good?
(a) Abstract incentives.
(b) Unknown incentives.
(c) Perverse incentives.
(d) Ghost incentives.

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

4. 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) Differential equation.
(b) Futures contract.
(c) Index fund.
(d) Human capital.

5. In finance, what is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price?
(a) Trade-off.
(b) Option.
(c) Bond.
(d) Portfolio.

Short Answer Questions

1. Human capital is extremely important in economics because it is also tied together with what?

2. What term was first used in the early 1990s to denote an organization's reputation as an employer?

3. Economists ignored signs of problems in what year because they didn't want to face what might happen in the future, according to the author in the Introduction?

4. What describes the extent to which time or effort is well used for the intended task or purpose?

5. A market economy delegates resources to an area where they are what, according to the author in Chapter 1?

(see the answer key)

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