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

Multiple Choice Questions

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

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

3. OPEC is an intergovernmental organization of how many oil-producing countries?
(a) 8.
(b) 12.
(c) 5.
(d) 23.

4. 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) Futures contract.
(c) Adverse selection.
(d) Money market.

5. 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) Research, fact check, invest.
(c) Save, invest, and repeat.
(d) Invest, watch, sell.

6. The Hope Scholarship program was shut down after how many years, according to the author?
(a) 4.
(b) 5.
(c) 2.
(d) 9.

7. 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) Portfolio.
(b) Option.
(c) Trade-off.
(d) Bond.

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 refers to the degree to which a correct forecast of a system's state can be made either qualitatively or quantitatively?
(a) Recession.
(b) Index.
(c) Security.
(d) Predictability.

10. North Korea is a single-party state under a united front led by what party?
(a) The Korean Workers' Party.
(b) The Democratic Party.
(c) The Korean Entitlement Party.
(d) The Communist Party.

11. Cuba remained a territory of Spain until the Spanish-American War ended in what year?
(a) 1841.
(b) 1862.
(c) 1898.
(d) 1913.

12. Gary Becker was awarded the Nobel Memorial Prize in Economic Sciences in what year?
(a) 2003.
(b) 1997.
(c) 1988.
(d) 1992.

13. What is a term used in economics that refers to a market process in which "bad" results occur when buyers and sellers have asymmetric information?
(a) Adverse selection.
(b) Asset allocation.
(c) Gresham's law.
(d) Pork barrel.

14. What is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual?
(a) Legislation.
(b) Portfolio.
(c) Collateral.
(d) Security.

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

Short Answer Questions

1. In Chapter 6, the author discusses poverty and income equality, using the example of what billionaire?

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

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

4. When did the Korean War end?

5. Michael Jensen is a professor at what university's business school?

(see the answer keys)

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