Economic literacy test

Via, this.

It\’s easy, you should get 13 out of 13.

Sadly, I\’d expect an awful lot of lefties wouldn\’t.

35 thoughts on “Economic literacy test”

  1. So Much For Subtlety

    I know nothing about economics at all and I got thirteen out of thirteen. Even though I think some of the questions might be open to alternative answers.

    Take the comparative advantage question for instance. I think it is reasonable to claim that one of the effects of Countries A and B specialising in what they do best would be a gradual equalisation of incomes. But not the obvious answer.

  2. Damn lighthouses! My mouse, er, slipped when I answered that question so I only got 12/13. Does that make me a leftie?

    I too am ignorant of economic theory but I know what makes sense to me. I’m not really a leftie am I? Just because of one stupid question?

    Captain “Concerned” Fatty

  3. The Cowboy Online

    Damn, I got 11 out of 13. One of the wrong answers was to do with sports personalities and it was my own fault for not reading all of the choices on offer, and the other wrong’un was the pollution one. I don’t even know why I didn’t go for the right answer, it looked right … have I been conditioned by too much media fussing over AGW?

  4. A small recovery in the average: 11.

    As SMFS remarks, there is scope for free marketers to disagree/come to blows over one or two answers.

    I reckon 10+ avoids re-education camp.

  5. 12 out of 13. The advantage of getting one wrong was that a longer rationale of the answer is displayed than if you get the answer right.

  6. The problem with the lighthouse question is that private businesses DID operate lighthouses.

    Yes, they had the right to charge a levy on ships as they put into nearby ports, but that still must have left a large free-rider problem, yet they still did it.

    The private lighthouses were compulsorily purchased by Trinity House (and let’s not get into whether that’s a piblic or private body) under an Act of Parliament at the beginning of the Victorian era. The price paid depended on their profits, and one was worth half a million pounds – serious money back then.

  7. I got 13/13. While it was obvious what the answer expected was, for many of these questions they could have been phrased better or reality is more complex.

  8. 13/13…..the lighthouse question is fine because it simply asks you to pick which of the 4 answers is the biggest disincentive, and that’s the free rider problem, not, e.g. that governments are better at operating lighthouses or whatever.

  9. I don’t get that lighthouse question.
    It doesn’t make any sense to me.

    The shipowner has a choice between insurance and/or using the lighthouse. So if he’s got insurance he is more likely to not pay to use the lighthouse. (Although his insurance company

  10. whoops!
    … may pay anyway).

    Even if there are ships using the lighhouse for free, there are still, I assume, some shipsowners paying for it. (Why would anyone start a lighthouse business without someone paying them a subscription fee to start with?)

  11. Not good if you skim read the answer choices.

    “Greater economic interdependence” , is not the same as Greater economic independence.

    Bugger

  12. 13/13 – but then I did study economics – and the lighthouse question was fine.

    It is not the fact that an end-user is willing to pay for a service that provides the incentive to start a business but whether the one who operates a business is in a position to extract revenues from end-users from offering it. And even if some were to buy insurance it would not solve the free-rider problem.

  13. Bloody hell. I’m a biologist. In dealing with economics, for which I have precisely zero qualifications, I rely on what I think is common sense.

    And I got 13/13.

    Conclusions: either, all you need for economics is common sense (but if that is so, why do not all economists agree?)

    Or: the answers for this test are heavily biased in favour of my version of common sense.

    Hmmm. Try applying my version of common sense:

    Some people think that Sir F*** G****** should be impeached, stripped of his knighthood, have all his ill-gotten wealth confiscated, and left to drag out a miserable and unemployable life in Scunthorpe.

    This is wrong because

    (a) Sir F*** is a member of the legally privileged politicofinancial aristocracy, who can never be blamed for anything

    (b) Even a miserable two-faced conniving bastard of a weasel deserves due legal process

    (c) Politicians of all stripes need money from financiers, and mustn’t upset them

    (d) Impeachment was due legal process, but hasn’t been used for some time, and didn’t work too well when it was used.
    Answers welcome.

    Tim adds: “all you need for economics is common sense”…you have noted the tag line for this blog then?

    BTW, b) is the answer.

    As for d) you don’t mean impeachment but a Bill of Attainder.

  14. “Conclusions: either, all you need for economics is common sense (but if that is so, why do not all economists agree?)”

    I suspect because not so many economists have common sense. And the pinkos certainly don’t.

  15. Tim, it could be impeachment or a Bill of Attainder.

    Impeachment was effectively a trial before the whole House of Lords, with the Commons as prosecutor (so the Commons first had to vote to impeach).

    The main differences were:

    a) Being a trial, impeachment needed the Commons to provide evidence to the House of Lords (although I don’t think the usual laws of evidence applied), whereas a Bill of Attainder was just a Bill, so could be passed on any or no evidence. So a Bill of Attainder was easier.

    b) But a Bill of Attainder, like all Bills, needs Royal Assent to make it an Act, so it wasn’t much use against Royal favourites.

  16. The “why do sportsmen get paid more than farmers?” one seemed an odd one to me; the answer given was “the supply of good sportsmen is smaller”.

    My answer would have been, “because the sportsman is creating more value in total” but that wasn’t even an option.

    The supply of my poo is very limited, but it doesn’t mean it’s worth anything to anyone else. Supply and demand levels don’t create value, they are simply one of the factors which affect it. My poo would only become valuable if it had utility to somebody else.

  17. I got 13/13 and have never had any formal training in economics.

    That must mean that everything in economics is obvious or trivial. Except…

    Oh, and Ian B…

    The answer was “the supply of good sportsmen is smaller” given the demand for their talents (or somesuch).

    DK

  18. Tim.

    Yes, I noted the tag line. What I want to know is: what are the exceptions? I doubt that all economics is so obvious that simple common sense provides all the answers. What are the questions that do not have obvious commonsense answers?

    I’d go for (b) on principle, but with worries about (d): if impeachment/Bill of Attainder used to be due legal process, has it been formally prohibited or just lapsed without anyone noticing?

    Tim adds: The “except” is Ricardo on comparative advantage. So said Paul Samuelson at least (or maybe it was Bob Solow) when asked the question.

  19. Stephen (#28) –

    Impeachment/Bill of Attainder are/were (no-one’s quite sure if they’ve lapsed through lack of use) legally valid, but that doesn’t mean that they ever were “due legal process”.

    “Due legal process” requires a certain standard of proceedings, not just that it is approved by the proper authorities.

    Impeachment was more of a proper legal process, because there was a court hearing of sorts, with evidence put forward and challenged.

    In contrast an Act of Attainder was clearly not due process. It was simply an Act of Parliament saying that X was to be punished. There was no need for evidence (and where there was, it was put forward in Parliamentary debate, not in a proper hearing), the accused had no right to be heard, and there was not even necessarily any formal charge or finding of guilt.

    Tim adds: Acts of Attainder were felt to be so unjust that they are specifically made unconstitutional in hte US Constitution.

  20. Tim – yes, the Yankees made Acts of Attainder unconstitutional. But their sense of injustice didn’t stop them using them against the Loyalists; they just made sure they did it before they ratified the Constitution.

  21. 12/13. I disagree with their answer to question 8, it assumes that the quantity and quality of labour and capital is fixed (along with the quantity of natural resources. However, immigration and borrowing from abroad are definitely possibilities.
    (You could re-word the question to fix, I guess, by specifying that you mean the global economy).

    Also, question 5 about the wheat-oil trading should have had the word “voluntarily” in it, and question 6 didn’t have an option of decreasing the money supply, just by itself. (I got the right answers for those, because of years of experience in test-taking).

  22. So in short, I think that the test writers got about 11 out of 13 right (question 8 wrong, and half marks for the writing on questions 5 and 6).

  23. The Pedant-General

    Oh and BTW: I think they randomly shuffle the questions, so “Q8” won’t necessarily translate…

    The 100% utilisation question was possibly a bit wobbly. The correct answer (which I got. 13/13 thank you for asking) was “less must be produced of something else” is I suppose true but not useful.

    The useful answer I was hoping to see would be “someone has to find a way of producing the existing goods and services but by using fewer resources or labour – i.e. increase efficiency/productivity”

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