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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.
Multiple Choice Questions
1. When was the Hope credit established?
(a) 1992.
(b) 1974.
(c) 1985.
(d) 1999.
2. The horns of the black rhinoceros are used to make what for the Yemenese people, according to the author in Chapter 2?
(a) Paperweights.
(b) Necklaces.
(c) Funnels.
(d) Daggers.
3. Gary Becker was awarded the Nobel Memorial Prize in Economic Sciences in what year?
(a) 1992.
(b) 2003.
(c) 1988.
(d) 1997.
4. What is the fourth simple need of financial markets, as discussed in Chapter 7?
(a) Raising capital.
(b) Insuring against risk.
(c) Storing, protecting and making profitable use of excess capital.
(d) Speculation.
5. 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) Futures contract.
(c) Asset allocation.
(d) Money market.
Short Answer Questions
1. According to the author in Chapter 7, the basic set of rules and investor should follow is to do what?
2. Gary Becker received the United States Presidential Medal of Freedom in what year?
3. What does the author refer to as a situation where individuals work in their own best interest, leading to an improved standard of living for society in general?
4. According to the author, there are two lessons to be learned from a monopoly situation. What is the first?
5. According to the author, the Hope Scholarships were a plan wherein students could borrow money for college and pay back their loans after they graduated using what?
Short Essay Questions
1. How does the author of the Foreword describe the focus the book of "Naked Economics: Undressing the Dismal Science"? Does he find it balanced? Why?
2. How is adverse selection described in the example of Hope Scholarships in Chapter 4?
3. What are the ramifications of decisions made in the world of finance and legislation, according to the author in the Introduction?
4. What human fallacies does the author address in the beginning of Chapter 7?
5. What are the second through fourth of the basic needs the author boils down for investment markets in Chapter 7?
6. Discuss the importance of information in economics. How does the author address the issue of information in Chapter 4?
7. How does the author describe Douglas Ivester's marketing tactic in Chapter 1?
8. How is the black rhinoceros described in Chapter 2? What are the horns of the animal worth in Yemen, and why?
9. What investment tactic is recommended for the average investor without much expertise in the market in Chapter 7?
10. What is the first of the basic needs the author boils down for investment markets in Chapter 7?
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