Click and Reveal
Q1. As part of our quiz on economy and business, that part of an investment return that is due to the skill of the fund manager, is called?
Ans. Alpha
Q2. In a crisis, bank depositors may start to doubt they will get their money back. So they may demand to withdraw it. Since banks have lent out this money, it is impossible for them to repay all depositors instantly. This phenomenon is called?
Ans. A bank run.
Q3. The term is often used to describe interest rate changes & is one hundredth of a percentage point, it is known as?
Ans. Basis Point.
Q4. This ratio measures the sensitivity of an individual asset’s price to that of the overall market, it is known as?
Ans. Beta
Q5. IOUs issued by a borrower which normally promise repayment of the money on a set date (the maturity) with regular interest payments during its life / duration, are known as?
Ans. Bonds
Straightforward
Q6. This is a tax levied when investors sell assets for more than the purchase price, it is known as?
Ans. Capital gains tax.
Q7. When the futures price of a commodity is higher than the spot price, this phenomenon is known as?
Ans. Contango.
Q8. A currency declared to be legal tender in a country by a government. Such a currency is not backed by gold or another asset, is known as?
Ans. Fiat currency.
Q9. In most tax systems, workers must earn a certain amount before they pay income tax, or pay it a higher rate. If those allowances are not uprated every year in line with inflation, workers end up paying more in tax in real terms when their wages rise. This phenomenon is called?
Ans. Fiscal drag.
Q10. A term given to workers whose jobs are part-time or temporary, and who thus lack job security. This term is?
Ans. Gig economy.
More on Business and Economy
Q11. This curve shows tax revenues increasing as tax rates rise from zero but starting to fall when tax rates reach a certain level, because high taxes discourage work and enterprise. This curve is also known as?
Ans. Laffer curve, named after Arthur Laffer, an American economist.
Q12. A derivative contract that gives the right, but not the obligation, to undertake a transaction at a set price for a set period, is known as?
Ans. Options.
Q13. Derivative agreements whereby two counterparties agree to exchange cashflows. For example, one party may agree to pay a fixed interest rate, and the other a variable rate, linked to some benchmark. When payment is due, the two cashflows will be netted out, so only one party will pay the other, such derivative agreements are known as?
Ans. Swaps.
Q14. There is a term for the view that economic advance by one party can only be at the expense of another. This philosophy underlies protectionism, which seeks to exclude the products of other countries. But most economists believe that open trade is mutually beneficial. What is this term?
Ans. Zero sum game.
Q15. Luxury goods for which demand increases in line with their price. Ownership of these goods confers social status, so their high price makes them more desirable by indicating that the buyer is part of the elite.
Ans. Veblen goods.
Bonus
Q16. If individuals have access to a public resource, they will exploit it, without considering the common good. So small farmers will let their animals graze on the common (since it is free) until all the vegetation is destroyed; over the centuries, humans have overfished the oceans. Avoiding this problem either requires regulation or market pricing to discourage overuse. What is this phenomenon called?
Ans. Tragedy of commons.
Q17. The policy of Self-sufficiency which regimes sometimes pursue in order to reduce their dependence on other countries in Economics is known as?
Ans. Autarky.
Q18. This term has been used by John Maynard Keynes to describe sentiment among businesspeople and consumers. If sentiment is depressed, economies may struggle to escape from recession? What is this term?
Ans. Animal spirit.
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