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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. According to the author, there are two lessons to be learned from a monopoly situation. What is the second?
(a) Government shouldn't actually do the work of maintaining infrastructure.
(b) Governments should maintain the financial infrastructure more.
(c) Governments should provide more services.
(d) Government shouldn't provide any service that could be covered by the private sector.

2. 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) Asset allocation.
(b) Gresham's law.
(c) Pork barrel.
(d) Adverse selection.

3. 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) $8,700.
(b) $6,000.
(c) $2,500.
(d) $1,000.

4. Burton G. Malkiel is an American economist, most famous for what classic finance book?
(a) Extreme Money: Masters of the Universe and the Cult of Risk.
(b) The Millionaire Next Door: The Surprising Secrets of America's Wealthy.
(c) The Wall Street MBA: Your Personal Crash Course in Corporate Finance.
(d) A Random Walk Down Wall Street.

5. The Lehman Brothers bank problem in 2008 occurred because the banks weren't what, according to the author?
(a) Analyzing risk.
(b) Keeping enough money on hand.
(c) Paying out interest.
(d) Using their own money.

Short Answer Questions

1. What is a political thesis of Kim Il-sung which says that the Korean masses are the masters of the country's development?

2. What is a financial term denoting a collection of investments held by an investment company, hedge fund, financial institution or individual?

3. Gary Becker is a professor of economics, sociology at what institution?

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

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?

Short Essay Questions

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

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

3. 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?

4. How do the resources of a country reflect its economic well-being, according to the author in Chapter 6?

5. Who wrote the book's Foreword? What does this individual say regarding the perception of economics and economists?

6. What examples does the author give for the uninformed relaying false information in the Introduction?

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

8. How is information a problem in the healthcare and insurance industries, as discussed in Chapter 5?

9. How is the black rhinoceros described in Chapter 2? What are the horns of the animal worth in Yemen, and why?

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

(see the answer keys)

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