FSOT : Practice Quiz On Economics! Trivia

Economic models are a helpful guide. Marxism is just one example of the damage that can occur when an economic model is taken to the extreme.

Written the same year as the Declaration of Independence, Adam Smith's economic opus (much referred to but little read) is called The Wealth of Nations.

Political instability and government corruption have prevented most of Africa's countries from making use of abundant natural resources. The lack of local capital does not play a significant role, because sizable investors do exist in Africa. International investors tend to avoid placing their money where there is political instability and bad governance.

The Federal Reserve will adjust monetary policy by increasing or decreasing the discount rate or the interest rate the Federal Reserve charges on loans it makes to banks. By increasing or decreasing this rate, the Fed can discourage or encourage banks to borrow the funds it creates and, therefore, make more loans to the public.

Keynes advocated government spending to flatten out the business cycle.

Although many people think of international trade as being a modern phenomena, it in fact has existed as long as mankind itself.

Wal-Mart continues to be the largest American importer.

Laissez-faire policies mean a policy of (governmental) non-intervention. In the field of economics, laissez-faire policies such as free trade were persuasively advocated by Adam Smith in his book The Wealth of Nations (1776).

The United States' manufacturing sector's decline has continued to grab headlines. As of January, 2004, the number of such jobs stood at 14.3 million, down by 3.0 million jobs, or 17.5 percent, since July 2000 and about 5.2 million since the historical peak in 1979. Employment in manufacturing was its lowest since July 1950.

The Foreign Corrupts Practices Act is an important sharper of U.S. business practices overseas. All U.S. citizens, companies, and employees (even if they are not U.S. citizens) fall under the auspices of this act; however, the act applies only to corrupt transactions with foreign government officials.

U.S. producers from the automobile, steel, and textile industries have all requested trade protection from foreign imports.

Venezuela is South America's only member of OPEC.

Pegged is the economic term used to indicate that a country has established its exchange rate by legislation or market operations.

Despite Switzerland's advanced economy, it continues to remain outside of the European Union.

Study after study indicates that Americans see themselves overwhelmingly as middle-class.

A favorable trade balance indicates that a country exports more than its imports from another country.

Critics of China's policies usually claim that its policy of keeping its currency undervalued underprices goods, making products from more freely traded currencies less competitive.

The European Union originated from the European Coal and Steel Community (ECSC), and organization meant to organize the free movement of coal and steel and free access to sources of production. In addition, a common central authority supervised the market, oversaw respect for competition, and ensured price transparency.

As agriculture's importance in the first world has diminished, its percentage of the GDP has steadily diminished as well.

U.S. tariffs on sugar imports from the Caribbean have kept U.S. sugar prices many times higher than the world average and have helped impoverish many Caribbean nations.

Comparative advantage is the idea that countries gain when they produce those items that they are most efficient at producing. In other words, Saudi Arabia has an advantage in producing high quality oil cheaply, therefore, it should use its export earnings to buy items such as wheat, which it has little ability to produce in comparison with Australia or Argentina.

Keynes is known for advocating that government practice a more interventionist economic policy.

The Hawala system has come under much scrutiny by international money laundering watchdogs, because it is an informal channel for transferring funds between different parts of the Middle East, thus avoiding traditional bank-oversight institutions.

Mercosur is the name of a South American free trade association. Members include Argentina, Uruguay, Brazil, and other South American nations.

Many factors, including historically low energy prices, increased efficiencies due to advantages in high technology, and downward pricing pressures from cheap offshore manufacturing centers all have contributed to keeping inflation at bay.

The German Mark is no longer a currency, because it was replaced by the Euro in 2002.

The consumer price index is the measure of change over time in prices paid by urban consumers for a market of goods and services.

The president's economic advisor has no official role in the economy, although his or her comments and view can have a powerful effect.

Bond yields typically decrease as stock yields increase. AS the economy improves (and stock prices rise), companies have an easier time raising money on the stock market; thus, bond issues decline. As the economy declines, bond yields rise as companies look to bond issues to raise capital.

Bird flu had a significant impact on economies in Southeastern Asia, while mad cow has had a significant impact on the U.K., Canadian, and other economies. AIDS has had a devastating effect on many economies in the world, particularly Africa.

Long-Term Capital Management was a hedge fund. A hedge fund uses futures to offset investment risk and is usually only available to the very wealthy.

Gross national product.

In general, in a weak economy, bond yields rise, because the cost of borrowing increases as corporations issue more bonds rather than sell stock to raise capital. Conversely, as the economy improves, borrowing becomes easier, and bond yields fall.

At one point, Weimar Germany's inflation rate was 4 trillion percent (November 15, 1923). In contrast, the United States actually suffered from deflation during the Great Depression, as agricultural prices dropped 51 percent (1929-1933).

The Phillips curve represents the relationship between employment and wage inflation and indicates that wages tend to rise as unemployment falls.

Russia maintains an overall trade surplus with Europe because of high revenues from energy sales.

German capitalism is characterized by a consensus between its large corporations and the state.

Gold is no longer used to back currency and has little intrinsic value, but in times of crisis, investors tend to gravitate toward gold as a reliable store of value.

The 1999 WTO meeting in Seattle became a lightning rod for anti-globalism protesters.

Congress enacted the 2002 Sarbanes-Oxley Act to better protect shareholders and the general public from accounting errors and fraudulent company accounting practices such as occurred at Enron and WorldCom.

According to supply/demand economics, price controls on the supply of wheat during a famine will almost always result in a scarcity of low-cost wheat. Supply/demand economics define price as the single most important factor. Accordingly, few suppliers will be willing to supply low-cost wheat if consumers are willing to pay higher costs on the black market. Further, if the price does not match the seller's perception of risk and actual expenses, sellers will withhold the product from the market, thus aggravating the already dire situation.

Personal consumption consistently represents 75 percent of gross national product (GNP), by far the largest category included in calculating a country's GDP.

Karl Marx wrote The Communist Manifesto in 1848 and then followed it up with Das Kapital, written in 1867, thus setting the stage for Marxism as an ideology. Adolf Hitler wrote Mein Kampf.

In 2001, Russia implemented a flat tax of 13 percent on personal income.

In the event of a large price increase, it would be relatively easy for customers to avoid the price increase by purchasing alternative products, for example, buying carrots rather than lettuce, choosing a Honda Accord rather than a Ford Explorer SUV, or renting a DVD rather than purchasing movie tickets. However, because vegetables comprise an entire category, it would be more difficult for consumers to change their buying habits to avoid the price increases associated with vegetables. Demand (or supply) is elastic if a small change in price results in a large change in demand. Conversely, is a small change in price does not result in a large change in demand, the demand is said to be inelastic.

Despite many years of study, economists can usually indicate only that a recession is in progress when firms and consumers suddenly change behaviors.

If the quantity demanded is greater than the quantity supplied, the price will rise until the point at which the price reaches the equilibrium price -- that is, the intersection of supply and demand.

A decline in a currency's value always benefits exporters, while tourists, truck drivers, importers, and other consumers who rely on imported goods or must purchase goods denominated in another currency will generally suffer as their purchasing power diminishes.

The United States had an unfavorable balance of payments as European capital financed building projects.

The breakup of Standard Oil, led by President Theodore Roosevelt, helped set the stage for the modern American economy, because it allowed smaller private companies to pursue oil production. The remnants of Standard Oil became dynamic separate entities, such as Exxon and Mobil.