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

Multiple Choice Questions

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

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

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

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

5. Who led the Cuban Revolution?
(a) Fulgencio Batista.
(b) Nicholas Sarkozy.
(c) Fidel Castro.
(d) Roberto Goizueta.

6. What is the capital of the Democratic People's Republic of Korea?
(a) Pyongyang.
(b) Beijing.
(c) Osaka.
(d) Honk Kong.

7. Where did politicians try to deal with the level of pollution by limiting driving based on license plate numbers, according to the author in Chapter 2?
(a) Pyongyang.
(b) Mexico City.
(c) London.
(d) New York.

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

9. 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) Money market.
(c) Futures contract.
(d) Asset allocation.

10. When did the Korean War end?
(a) 1970.
(b) 1966.
(c) 1962.
(d) 1953.

11. What refers to reasoning which constructs or evaluates deductive arguments?
(a) Deductive reasoning.
(b) Critical reasoning.
(c) Constructive reasoning.
(d) Decisive reasoning.

12. Michael Jensen is a professor at what university's business school?
(a) Harvard University.
(b) Fordham University.
(c) The University of Chicago.
(d) Yale University.

13. What is an economic model of price determination in a market that concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers?
(a) Floating exchange rate.
(b) Adverse selection.
(c) Supply and demand.
(d) Money market.

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

15. What is the fourth simple need of financial markets, as discussed in Chapter 7?
(a) Raising capital.
(b) Speculation.
(c) Insuring against risk.
(d) Storing, protecting and making profitable use of excess capital.

Short Answer Questions

1. What is the financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level?

2. What is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities?

3. Cuba remained a territory of Spain until the Spanish-American War ended in what year?

4. According to the author, insurance companies want to save money while doctors want to help patients and avoid what?

5. Arab members of OPEC alarmed the developed world when they used the "oil weapon" during what war by implementing oil embargoes?

(see the answer keys)

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