Every Friday, we challenge our readers with five financial trivia questions drawn from the financial pages, accreditation organisations, and from readers who share our enthusiasm for the perfectly-conceived quiz question.
To see the answers, go to page 2. To suggest a question, email [email protected]
1. Rank these currencies in order of smallest to largest (that is, in increasing order of the relative value of a single unit of each currency):
British pound sterling; US dollar; Indian Rupee; European euro; and Japanese yen.
2. In her 2009 bestseller Fool’s Gold, Financial Times journalist Gillian Tett says which particular financial product played a major role in bringing about the 2008 financial crisis?
3. Almost 20 years ago, a certain well-known American economist said that the computer age could be seen “everywhere but in the productivity statistics”. Who is he, and what, apart from this quote, has been his general contribution to economic theory?
4. If “deflation” is a decline in the prices of goods and services – the reverse of inflation – what is meant by “disinflation”?
5. Why is the concept of limited liability, first introduced in the US in 1811, so key to industrial capitalism?
(To see the answers to these five questions, go to page 2.)
Answers to International Investment’s Friday Trivia Quiz:
1.In order: Japanese yen, Indian Rupee, US dollar, Euro, UK pound
2. Credit derivatives
3. Robert Solow is the American economist who, in 1987, said you “can see the computer age everywhere but in the productivity statistics”. This statement is often cited in discussions of the so-called “productivity paradox”, which refers to the fact that productivity increases sometimes seem to lag the introduction of major advances in computer capacity and power.
Solow’s contributions as an economist generally have had to do with his observations with respect to the relationship between worker output and technical and technological progress.
4. Disinflation is a slowing down in the rate of price increases
5. Under limited liability, the shareholders of a business are not liable, at last resort, for the debts of their company. The introduction of this structure meant that shareholders could afford to risk their own capital in a way that they couldn’t if they had to worry about going bankrupt, or being sent to jail. This not only unlocked vast sums of money, but it also freed new companies from the burden of fixed-interest debt. As the limited liability concept became established towards the end of the 19th century, the door was opened for financing such capital-intense projects as railways and factories, which in turn helped to fuel the industrial revolution.