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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 2, the average annual income is what in the location where black rhinoceros horns are worth much on the black market?
(a) $1,000.
(b) $6,000.
(c) $2,500.
(d) $8,700.

2. 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?
(a) 1998.
(b) 1994.
(c) 2002.
(d) 2005.

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

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

5. In finance, what is a debt security in which the authorized issuer owes the holders a debt and, depending on the terms, is obliged to pay interest to use and/or to repay the principal at a later date?
(a) Bond.
(b) Deductible.
(c) Stock.
(d) Option.

6. 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) Pork barrel.
(c) Asset allocation.
(d) Gresham's law.

7. What contends that prices of publicly traded assets reflect all publicly available information?
(a) Adverse selection.
(b) The uniform pay scale.
(c) The efficient market hypothesis.
(d) Supply and demand.

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

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

10. 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) Index fund.
(c) Money market.
(d) Futures contract.

11. 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) New York.
(b) Pyongyang.
(c) Mexico City.
(d) London.

12. What is a contract between two parties that specifies conditions under which payments, or payoffs, are to be made between the parties?
(a) Exchange rate.
(b) Derivative.
(c) Legislation.
(d) Futures contract.

13. When was Burton G. Malkiel born?
(a) 1907.
(b) 1925.
(c) 1918.
(d) 1932.

14. What describes the extent to which time or effort is well used for the intended task or purpose?
(a) Reliability.
(b) Intention.
(c) Efficiency.
(d) Proximity.

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

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

3. The horns of the black rhinoceros are used to make what for the Yemenese people, according to the author in Chapter 2?

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?

5. 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?

(see the answer keys)

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