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This test consists of 5 short answer questions, 10 short essay questions, and 1 (of 3) essay topics.

Short Answer Questions

1. According to the author in Chapter 3, it's up to whom to consider the broad social consequences of decisions In a market economy?

2. What refers to the degree to which a correct forecast of a system's state can be made either qualitatively or quantitatively?

3. OPEC has maintained its headquarters where since 1965?

4. According to the author in Chapter 1, companies want to profit, and consumers want what?

5. In Chapter 2, the author discusses how the black rhinoceros is nearly extinct and that the horns are considered what?

Short Essay Questions

1. How is the question of income security answered by the author in Chapter 6?

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

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

4. How does the author address the question of "getting rich quickly" in the market in Chapter 7?

5. What solution does the author consider for the problem with the black rhinoceros in Chapter 2?

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

7. 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?

8. How is branding described as an economic strategy in Chapter 5?

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

10. How does the author describe the concept of maximizing profits in Chapter 1? What examples does he give?

Essay Topics

Write an essay for ONE of the following topics:

Essay Topic 1

Discuss the career of economist Burton G. Malkiel and the efficient market hypothesis. When was the efficient market hypothesis developed? What ideas are presented in Malkiel's "A Random Walk Down Wall Street"? What does Malkiel write in the Forward to "Naked Economics: Undressing the Dismal Science"?

Essay Topic 2

Describe and analyze the Hope Scholarship program and the Clinton Administration. When were Hope Scholarships introduced and when did they dissipate? How are Hope Scholarships used as an example of adverse selection in the book? What are other examples where adverse selection can be seen in recent history?

Essay Topic 3

Describe and discuss the most recent Japanese and U.S. recessions. When, according to the author, did Japan's economic decline begin? What led to it? What do these recessions have in common? How do they differ? What are the different viewpoints regarding how to pull America from its current recession? What legislation has attempted to boost the economy? Has it been effective? Why or why not?

(see the answer keys)

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