Economics Fundamentals Quiz — 7 Free Questions

Question 1

What is the name for money that has value only because a government declares it to be money and people trust and accept it, rather than because it is made of, or redeemable for, anything precious?

Question 2

What is the name for the problem that occurs before a deal is struck when the party with more information self-selects in a way that harms the other, so that mainly the worst risks buy insurance or the worst cars reach the used market?

Question 3

What is the name for the single number between zero and one that summarises how unequally income or wealth is distributed across a population, with zero meaning everyone has the same and one meaning a single person has everything?

Question 4

What is the name for a market dominated by a small number of large firms, each big enough that its pricing and output decisions visibly affect the others?

Question 5

What is the name for the simple ability of a country, firm or person to produce more of a good than another using the same resources, or the same amount using fewer resources?

Question 6

What is the name for the process, given its memorable label by Joseph Schumpeter, by which new products, technologies and firms continually arise and sweep away the old ones, so that economic progress is inseparable from the ruin of what came before?

Question 7

What is the name for the case in which the quantity people buy of a good barely changes when its price moves, so that a large price rise brings only a small drop in sales?

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About Economics Fundamentals

This quiz is the grounding for the whole set: one hundred questions on the core ideas of economics, the ones a newspaper assumes you already know. Each question describes a concept, a measure, a policy tool, a market structure or a whole economic system, and asks you to name it from four choices of the same kind, then explains it.

The five packs move outward in rings. The first covers the price mechanism and the headline numbers: supply and demand, equilibrium, shortages and surpluses, price controls, inflation and deflation, the consumer price index, national output, recession, the business cycle, unemployment, central banks, interest rates and money itself. The second turns to the firm and the market: elasticity, normal and inferior and substitute and complement goods, diminishing marginal utility, opportunity cost, the production frontier, fixed and variable costs, economies of scale, and the four market structures from perfect competition to monopoly.

The third pack is macroeconomic management: fiscal and monetary policy, deficits and debt, quantitative easing, the money supply, the multiplier, aggregate demand and supply, stagflation, the Phillips curve, progressive and regressive and indirect taxes, crowding out, automatic stabilisers, the velocity of money and hyperinflation. The fourth covers trade, labour and market failure: comparative advantage, tariffs and quotas, the exchange rate, public goods and externalities, the tragedy of the commons, subsidies, the Gini coefficient, the poverty line, unions and the kinds of unemployment. The fifth gathers the systems and the sharper ideas: market, command and mixed economies, the invisible hand, laissez-faire, the dismal science, macro versus micro, ceteris paribus, normative versus positive, the circular flow, real versus nominal output, the Laffer curve, moral hazard and adverse selection, the free-rider problem, the prisoner's dilemma, behavioural economics and creative destruction.

The wrong answers are always other economic terms of the same type, so a firm grasp is rewarded and a guess is quickly exposed. Around a fifth of the questions carry a neutral photograph, a stock-exchange floor, an exchange building, a banknote, a handful of coins, a container ship, a central bank, that fits any of the four options equally and so gives nothing away. No mathematics is needed and no prior study is assumed; the descriptions do the teaching. Where an idea is tied to one thinker, Smith's invisible hand, Ricardo's comparative advantage, Schumpeter's creative destruction, it is treated here as a concept, with the people and their books left to the next quiz in the set. Definitions and attributions have been checked against standard reference works.