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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. In what year did Douglas Ivester tell his sales team to pass free Coca-Cola around as the Berlin Wall toppled?
(a) 1989.
(b) 1977.
(c) 1969.
(d) 1982.

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

3. In an insurance policy, what is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses?
(a) Collateral.
(b) Subsidy.
(c) Deductible.
(d) Inflation.

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

5. Douglas Ivester's goal was achieving what when he told his sales team to pass free Coca-Cola around as the Berlin Wall toppled?
(a) World domination.
(b) Freedom for the German people.
(c) Brand recognition.
(d) Reinstitution of Communism.

Short Answer Questions

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

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. A market economy delegates resources to an area where they are what, according to the author in Chapter 1?

4. When did the Korean War begin?

5. Ross Perot ran for President of the United States in what year?

Short Essay Questions

1. How does the health of the economy affect income inequality, according to the author in Chapter 6?

2. What are the ramifications of decisions made in the world of finance and legislation, according to the author in the Introduction?

3. What lessons can be learned from a monopoly situation according to the author in Chapter 4?

4. How does the author describe Douglas Ivester's marketing tactic in Chapter 1?

5. How does human capital relate to productivity? How does this in turn reflect the economic well-being of a nation, according to the author in Chapter 6?

6. What example does the author give for the negative effect of incentives in Chapter 2?

7. How does the author describe the tactics used by OPEC in Chapter 1?

8. How is adverse selection described in the example of Hope Scholarships in Chapter 4?

9. What is the difficulty of studying economics, according to the author of the Foreword? What is the role of economics in everyday activities?

10. What human fallacies does the author address in the beginning of Chapter 7?

(see the answer keys)

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