The Ultimate Quiz On Economics - 2

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The Ultimate Quiz On Economics - 2 - Quiz

How Much do you know about Economics?


Questions and Answers
  • 1. 

    How many ridges are on the outside of a dime?

    • A.

      118

    • B.

      78

    • C.

      58

    • D.

      98

    Correct Answer
    A. 118
    Explanation
    A dime has 118 ridges on its outside. Ridges are the raised lines that are present on the edges of a coin. These ridges serve as a security feature to prevent counterfeiting and make it easier to detect if a coin has been tampered with.

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  • 2. 

    What does the financial acronym GARP stand for?

    • A.

      Growth At A Reasonable Price

    • B.

      Growth At A Rapid Pace

    • C.

      Growth At A Reduced Pace

    • D.

      Growth At A Raised Price

    Correct Answer
    A. Growth At A Reasonable Price
    Explanation
    GARP stands for Growth At A Reasonable Price. This acronym is commonly used in the financial industry to describe an investment strategy that focuses on finding stocks with strong growth potential, but at a price that is considered reasonable or undervalued. This approach aims to identify companies that have the potential for future growth, but are not overpriced compared to their earnings or other valuation metrics. By investing in these stocks, investors hope to achieve both capital appreciation and a reasonable return on their investment.

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  • 3. 

    What U.S. President famously bragged about having "killed" the Second Bank of the United States?

    • A.

      James K. Polk

    • B.

      Thomas Jefferson

    • C.

      Martin van Buren

    • D.

      Andrew Jackson

    Correct Answer
    D. Andrew Jackson
    Explanation
    Andrew Jackson famously bragged about having "killed" the Second Bank of the United States. During his presidency, Jackson strongly opposed the bank, viewing it as an institution that favored the wealthy elite and held too much power over the economy. He vetoed the rechartering of the bank and withdrew federal funds from it, effectively causing its demise. Jackson's actions were seen as a victory for populism and a symbol of his commitment to limiting the influence of financial institutions in American politics.

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  • 4. 

    Often used as a benchmark for a country's economic health, PPP stands for purchasing power what?

    • A.

      Process

    • B.

      Parity

    • C.

      Per Capita

    • D.

      Premium

    Correct Answer
    B. Parity
    Explanation
    PPP stands for purchasing power parity. It is a measure used to compare the purchasing power of different currencies and countries. It takes into account the cost of living and inflation rates to determine the relative value of currencies. By using PPP, economists can assess the economic health of a country and make comparisons between different economies. Parity refers to the equality or equivalence of two things, in this case, the purchasing power of different currencies.

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  • 5. 

    Who served as the first U.S. Secretary of the Treasury?

    • A.

      Henry Knox

    • B.

      Samuel Dexter

    • C.

      Alexander Hamilton

    • D.

      Oliver Wolcott, Jr.

    Correct Answer
    C. Alexander Hamilton
    Explanation
    Alexander Hamilton served as the first U.S. Secretary of the Treasury. He was appointed by President George Washington in 1789 and played a crucial role in establishing the financial system of the United States. Hamilton's policies included the creation of a national bank, the assumption of state debts, and the implementation of tariffs to promote domestic industry. His contributions laid the foundation for the country's economic growth and stability.

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  • 6. 

    Which spread is the difference between the yield on a 3-month U.S. Treasury bill and the yield on a 3-month LIBOR?

    • A.

      LUN Spread

    • B.

      DOK Spread

    • C.

      MIC Spread

    • D.

      TED Spread

    Correct Answer
    D. TED Spread
    Explanation
    The TED Spread is the correct answer because it represents the difference between the yield on a 3-month U.S. Treasury bill and the yield on a 3-month LIBOR. The TED Spread is often used as an indicator of perceived credit risk in the financial markets. A higher TED Spread suggests that banks are less willing to lend to each other, indicating increased credit risk and potential financial instability. Conversely, a lower TED Spread indicates lower credit risk and a healthier financial system.

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  • 7. 

    What risky investment act involves borrowing money in order to invest in securities?

    • A.

      Buying On Leverage

    • B.

      Buying On Fringe

    • C.

      Buying On Margin

    • D.

      Buying On Potential

    Correct Answer
    C. Buying On Margin
    Explanation
    Buying on margin is a risky investment act that involves borrowing money in order to invest in securities. This means that an investor can purchase more stocks than they can afford by using borrowed funds from a broker. While buying on margin can potentially lead to higher returns, it also increases the risk of losses. If the value of the securities decline, the investor may be required to repay the borrowed funds, even if the value of their investment has decreased. This can result in significant financial losses.

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  • 8. 

    Which federal organization regulates debt collection through the Fair Debt Collection Process Act?

    • A.

      FTC

    • B.

      CFOC

    • C.

      FFIEC

    • D.

      FDIC

    Correct Answer
    A. FTC
    Explanation
    The correct answer is FTC. The Federal Trade Commission (FTC) is the federal organization that regulates debt collection through the Fair Debt Collection Process Act. The FTC enforces the provisions of this act, which aims to protect consumers from unfair and abusive debt collection practices. The FTC ensures that debt collectors follow the guidelines outlined in the act, such as providing consumers with certain disclosures and prohibiting harassment or deception in debt collection.

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  • 9. 

    Which type of capital is used to finance new, potentially high-risk projects?

    • A.

      Venture Capital

    • B.

      Share Capital

    • C.

      Trade Credit

    • D.

      Debenture

    Correct Answer
    A. Venture Capital
    Explanation
    Venture capital is the correct answer because it is a type of capital specifically used to finance new and potentially high-risk projects. Venture capitalists provide funding to start-up companies or small businesses that have the potential for significant growth and profitability. They typically take on a higher level of risk compared to other types of capital providers, such as banks or traditional investors, in exchange for a share of ownership or equity in the company. This form of financing is often sought by entrepreneurs who have innovative ideas but lack the necessary funds to bring them to fruition.

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  • 10. 

    If a person would rather receive $50 than receive either $0 or $100 based on a coin flip outcome, then that person could be described as...

    • A.

      Risk-Averse

    • B.

      Risk-Dominant

    • C.

      Risk-Loving

    • D.

      Risk-Neutral

    Correct Answer
    A. Risk-Averse
    Explanation
    A person who would rather receive $50 than take the risk of receiving either $0 or $100 based on a coin flip outcome can be described as risk-averse. This means that they prefer a certain outcome with a lower payoff over a risky outcome with potentially higher payoffs. They prioritize minimizing potential losses and prefer certainty over uncertainty when making decisions.

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  • 11. 

    Combining the characteristics of Red Chip and Blue Chip stocks, Purple Chip stocks are traded in what city-state?

    • A.

      Hong Kong

    • B.

      Macao

    • C.

      Monaco

    • D.

      Singapore

    Correct Answer
    A. Hong Kong
    Explanation
    Purple Chip stocks are a combination of Red Chip and Blue Chip stocks. Red Chip stocks are those of mainland Chinese companies listed in Hong Kong, while Blue Chip stocks are shares of well-established and financially stable companies. Therefore, it can be inferred that Purple Chip stocks would also be traded in Hong Kong, as it is the city-state where both Red Chip and Blue Chip stocks are commonly traded.

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  • 12. 

    As of 2011, which of the following is not a member of the G-8?

    • A.

      Canada

    • B.

      China

    • C.

      Italy

    • D.

      Russia

    Correct Answer
    B. China
    Explanation
    China is not a member of the G-8 as of 2011. The G-8, also known as the Group of Eight, is an international organization consisting of eight of the world's largest economies: Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States. China is not included in this group, making it the correct answer.

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  • 13. 

    Approximately what percentage of U.S. paper money is printed for the purpose of replacing old money?

    • A.

      85%

    • B.

      75%

    • C.

      65%

    • D.

      95%

    Correct Answer
    D. 95%
    Explanation
    Approximately 95% of U.S. paper money is printed for the purpose of replacing old money. This means that the majority of new money being printed is to replace worn-out or damaged bills that are taken out of circulation. This high percentage suggests that the U.S. government regularly replaces old money to ensure the quality and integrity of the currency in circulation.

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  • 14. 

    Which of the following is true of a Roth IRA?

    • A.

      It Is Less Flexible Than A Traditional IRA

    • B.

      Its Assets Cannot Be Passed On To Heirs

    • C.

      Qualified Distributions Are Taxed

    • D.

      Contributions Are Not Tax Deductible

    Correct Answer
    D. Contributions Are Not Tax Deductible
    Explanation
    A Roth IRA is a retirement account where contributions are made with after-tax dollars, meaning they are not tax deductible. This is different from a traditional IRA where contributions are made with pre-tax dollars and are tax deductible. The advantage of a Roth IRA is that qualified distributions, including earnings, are tax-free. Additionally, a Roth IRA offers more flexibility than a traditional IRA, as there are no required minimum distributions and contributions can be withdrawn at any time without penalty. The assets in a Roth IRA can also be passed on to heirs tax-free.

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  • 15. 

    What treatise by Adam Smith is often considered to be the origin point of modern economics?

    • A.

      Progress and Poverty

    • B.

      The Affluent Society

    • C.

      The Wealth of Nations

    • D.

      Value and Capital

    Correct Answer
    C. The Wealth of Nations
    Explanation
    "The Wealth of Nations" is often considered to be the origin point of modern economics because it is a seminal work that laid the foundation for classical economics. In this treatise, Adam Smith discussed various economic concepts such as the division of labor, the invisible hand, and the theory of absolute advantage. The book also explored the role of markets, free trade, and the importance of individual self-interest in driving economic growth and prosperity. Overall, "The Wealth of Nations" revolutionized economic thinking and remains a fundamental text in the field of economics.

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