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

2. 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?
(a) Integral financial system.
(b) Universal financial system.
(c) Common financial system.
(d) Global financial system.

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

4. When did Ross Perot found Electronic Data Systems?
(a) 1977.
(b) 1971.
(c) 1962.
(d) 1955.

5. When was Gary Becker born?
(a) 1945.
(b) 1956.
(c) 1922.
(d) 1930.

Short Answer Questions

1. 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?

2. Who introduced the Hope credit?

3. 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?

4. What contends that prices of publicly traded assets reflect all publicly available information?

5. 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?

Short Essay Questions

1. Discuss the importance of information in economics. How does the author address the issue of information in Chapter 4?

2. What stereotypical scene does the author depict of an economics student in the Introduction?

3. How has the market economy contributed to a higher standard of living in America, according to the author in Chapter 1?

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

5. What is the basic set of rules put forth by the author for those looking to invest in Chapter 7? How are risk and reward described?

6. What is a "diversified portfolio"? What does the author state regarding this in Chapter 7?

7. How does the author of the Foreword describe Charles Wheelan's approach to explaining economics in "Naked Economics: Undressing the Dismal Science"?

8. 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?

9. What do economists assume about human nature and motivation, according to the author in Chapter 1?

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

(see the answer keys)

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