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

Multiple Choice Questions

1. What is an economic principle that states "Bad money drives out good"?
(a) The Juche Idea.
(b) Gresham's law.
(c) The uniform pay scale.
(d) Adverse selection.

2. Economists call the cycle of recession and recovery what, according to the author in Chapter 9?
(a) Trade-off.
(b) The business cycle.
(c) Gresham's law.
(d) Perverse incentives.

3. According to the author in Chapter 9, to ensure accuracy, the real GDP is a figure that has been adjusted to account for what?
(a) Interest.
(b) Deflation.
(c) Inflation.
(d) Collateral.

4. What refers to law which has been enacted by a legislature or other governing body, or the process of making it?
(a) Legislation.
(b) Trade-off.
(c) Hedge.
(d) Gresham's law.

5. What is a Latin prepositional phrase meaning "by heads"?
(a) Per capita.
(b) E Pluribus Unum.
(c) In Unum.
(d) Et cetera.

6. In 1900, a pair of stockings would cost how much money according to the author in Chapter 9?
(a) $0.50.
(b) $0.25.
(c) $0.60.
(d) $0.75.

7. Nonperforming loans and bad investments caused the banks to suffer in Iceland, and by the fall of 2008, how many major banks in the country were defunct according to the author in Chapter 11?
(a) 12.
(b) 8.
(c) 3.
(d) 5.

8. What does ERM stand for?
(a) Electronic Remanufacturing Market.
(b) Education Resource Mechanism.
(c) Environmental Rarity Market.
(d) European Exchange Rate Mechanism.

9. In lending agreements, what is a borrower's pledge of specific property to a lender, to secure repayment of a loan?
(a) Collateral.
(b) Interest.
(c) Subsidy.
(d) Hedge.

10. The United Nations Monetary and Financial Conference was commonly known as what?
(a) The San Diego conference.
(b) The Bretton Woods conference.
(c) The Yosemite Falls conference.
(d) The New York and Europe conference.

11. What is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market?
(a) Interdependent exchange rate.
(b) Floating exchange rate.
(c) Subsidized exchange rate.
(d) Inflationary exchange rate.

12. Americans today are how many times as rich as an American in the 1940s according to the author in Chapter 9?
(a) 5.
(b) 14.
(c) 10.
(d) 2.

13. From 1997 to 2002, Charles Wheelan was the Midwest correspondent for what publication?
(a) The Economist.
(b) The Wall Street Journal.
(c) Investors Business Daily.
(d) The Economic Times.

14. According to the author in Chapter 9, the average wage of an American in the year 2000 was over how much hourly?
(a) $13.
(b) $18.
(c) $15.
(d) $9.

15. The benefit of the HDI in comparison to the GDP is that the GDP does not measure what, according to the author in Chapter 9?
(a) Happiness.
(b) Productivity.
(c) Inflation.
(d) Political unrest.

Short Answer Questions

1. The U.S. adopted a silver standard based on the Spanish milled dollar in what year?

2. When did the Great Depression begin in the United States?

3. When did the California Gold Rush begin?

4. In economics, what refers to a general slowdown in economic activity?

5. In order to get a true understanding of an economy, there are nine factors one should consider along with the GDP according to the author in Chapter 9. What is the fifth?

(see the answer keys)

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