148 Fun Facts About Economics

In a market economy, what primarily determines the price of goods and services?

The interaction of supply and demand sets prices: when buyers want more than sellers offer, prices climb; when goods pile up unsold, they fall. No planner needs to set them.

Which of the following is a fundamental characteristic of a capitalist economic system?

Private ownership of production is capitalism's defining feature: individuals and firms own the factories and tools and run them for profit, so what gets made follows what buyers will pay for rather than a state plan.

What does Gross Domestic Product (GDP) measure?

The market value of final goods and services produced in a country in a year; only final sales count, so a tyre sold to a carmaker isn't counted twice, and unpaid work at home isn't counted at all.

In economics, what is the 'opportunity cost' of a decision?

The value of the best alternative forgone is the opportunity cost, which is why a degree costs more than its fees: the hours spent in class could have earned wages at a paying job.

Which economist's 1936 'General Theory' argued for government spending to end slumps?

John Maynard Keynes denied that an economy automatically returns to full employment; writing in the shadow of the Great Depression, he argued that when private demand collapses, government spending has to fill the gap.

Who completed and published volumes II and III of Marx's 'Das Kapital' from his manuscripts?

Friedrich Engels spent the years after Marx's death in 1883 deciphering his friend's near-illegible manuscripts, publishing volume II in 1885 and volume III in 1894, a year before he died himself.

Which institution created the economics prize awarded alongside the Nobels, marking its own 300th anniversary in 1968?

Sveriges Riksbank endowed the prize in 1968 for its own 300th anniversary; economics is not among the prizes Alfred Nobel's will set up, and the bank, not his estate, still pays the prize money.

Which economic system do economists say most real-world countries run?

A mixed economy is what nearly every country runs: even the market-leaning United States and state-led China blend private enterprise with government direction, and neither is a pure case.

What financial metric is the cost of borrowing money, usually expressed as a percentage?

Interest rates are a fundamental component of financial markets, influencing everything from mortgages and loans to savings accounts and investments.

What occurs when a government's total expenditures exceed its total revenues over a specific period?

A budget deficit means the government spent more than it took in that year; the national debt is the pile of past deficits it still owes.

In trade theory, what describes a country producing a good more efficiently than another country?

Absolute advantage is simply making a good with fewer resources than a rival can; it explains trade only when each side is outright better at something, and economists later showed that trade pays even without it.

What principle says countries should specialise where their opportunity cost is lowest, even if less efficient overall?

Comparative advantage was set out by David Ricardo in 1817: in his example Portugal could make both wine and cloth with less labour than England, yet both gained when Portugal made the wine and England the cloth.

Which market structure has a single seller, high barriers to entry and strong pricing power?

A monopoly is one seller with no close substitutes, so it sets prices rather than accepting them; the board game of the same name began as a lesson in its dangers.

What is a downturn of two consecutive quarters of falling GDP commonly called?

A recession is a broad decline in economic activity; the popular rule of thumb is two consecutive quarters of falling real GDP, though the US NBER dates recessions using a wider set of indicators.

Which publication has published the tongue-in-cheek Big Mac Index since 1986?

The Economist introduced the index in September 1986 as a light-hearted guide to whether currencies are at their 'correct' level: in theory the same burger should cost the same in every country.

Which economic school advocates minimal government intervention, holding that free markets naturally yield efficiency?

Classical economics, the school of David Ricardo and John Stuart Mill, held that markets correct themselves, with prices and wages adjusting until goods and workers find takers, so it urged governments to leave trade and industry alone.

What term describes average cost per unit falling as production of a good increases?

Economies of scale are the logic behind warehouse chains like Costco: buying and selling in bulk spreads the cost of buildings, equipment and advertising over far more units, so each one costs less to supply.

What do economists call something both non-excludable and non-rivalrous?

A public good such as national defence or a lighthouse can't be fenced off and isn't used up, so people can enjoy it without paying; that free-rider problem is why governments usually fund such things from taxes.

Which institution is typically responsible for setting a country's monetary policy, chiefly through interest rates?

The central bank manages the money supply and interest rates, and is usually kept at arm's length from politicians so it can make unpopular decisions.

Which institution was founded at the 1944 Bretton Woods conference alongside the International Monetary Fund?

The World Bank was set up to help rebuild war-torn Europe, and its first loan, in 1947, went to France; only when American aid took over that job did it turn to dams, roads and power plants in poorer countries.

Which graph rests on the idea that a 0% or 100% tax rate raises no revenue?

The Laffer curve, named by Jude Wanniski in 1978 after economist Arthur Laffer, holds that tax revenue is zero at both 0% and 100% rates and peaks in between, so raising rates past the peak shrinks the take.

Which graph shows inequality by plotting the cumulative share of income earned by the poorest x percent of households?

The Lorenz curve was devised by the American economist Max O. Lorenz in 1905; under perfect equality it would be a straight diagonal, and the further it sags below that line, the more unequal the society.

When a government increases spending or cuts taxes to stimulate the economy, what is it doing?

Expansionary fiscal policy means spending more or taxing less to lift demand when an economy is running below its potential, as the United States did in 2009 with a stimulus of tax cuts and spending on roads, schools and energy.

What is a staple called when people buy more of it as it gets dearer, because they can no longer afford alternatives?

A Giffen good is a staple whose demand rises with its price; Alfred Marshall's example, credited to Robert Giffen, was bread among the very poor, who drop meat and buy even more bread when bread gets dearer.

Which behavioral-economics finding says a setback stings about twice as hard as an equal-sized win pleases?

Loss aversion, named by two psychologists in 1979, means a loss is felt about twice as strongly as an equal gain, so people often cling to what they already have rather than risk it for something better.

What type of unemployment comes from a mismatch between workers' skills and available jobs?

Structural unemployment arises when workers' skills do not match the jobs on offer, as when laid-off miners cannot fill local software vacancies; unlike cyclical unemployment it persists through recoveries.

What shows the combinations of two goods that give a consumer the same utility?

An indifference curve joins every bundle of two goods that leaves a consumer equally satisfied; people want the highest curve their budget allows, so the bundle they buy is where a curve just touches the budget line.

Which curve says that in the short run, lower unemployment comes with higher inflation?

The Phillips curve, drawn by A. W. Phillips in 1958 from a century of UK wage and unemployment data, pairs low unemployment with high inflation; the 1970s, when both rose together, broke the short-run pattern.

What is a luxury item called when raising its price increases demand for it?

A Veblen good sells better the dearer it gets, because the price is the point; Thorstein Veblen called the motive conspicuous consumption, and the demand curve slopes upward.

What is the term for a tax imposed on imported goods and services?

A tariff makes imports dearer for the shoppers and firms who buy them, which shelters home producers from foreign rivals: in effect it is a subsidy paid by consumers to the protected industries.

Which 'invisible hand' economist is considered the father of modern economics?

Adam Smith used the phrase 'invisible hand' only once in The Wealth of Nations, yet it became shorthand for his whole argument that people chasing their own gain can end up benefiting society without meaning to.

Which Greek letter names a stock's sensitivity to swings in the overall market, with 1 meaning it moves in step?

Beta compares a share's swings with the market's: at 1 it moves in step, while a tech stock with a beta of 1.75 tends to rise or fall 1.75 times as far, which is why investors read it as a gauge of market risk.

The United States Federal Reserve was created by an act of Congress in which year?

The Federal Reserve Act of 1913 followed the severe banking panic of 1907; the Fed's mandate is maximum employment, stable prices and moderate long-term interest rates.

What term describes costs or benefits that producing or consuming a good imposes on uninvolved third parties?

Externalities are costs or benefits landing on people who never agreed to them, like factory smoke or a neighbour's beehives, which is why markets left alone misprice them.

What game-theory term describes each player's strategy being the best response to all the others'?

A Nash equilibrium is a standoff where nobody gains by changing strategy alone, so players can stay stuck in one even when another outcome would leave them all better off; John Nash's life became the film A Beautiful Mind.

Which of the following is considered one of the four main factors of production?

Land, to an economist, covers every gift of nature from soil and forests to oil; since no one produced it, Henry George argued in 1879 that its rental value belongs to everyone and should be the one thing governments tax.

Which measure of income inequality runs from 0, where everyone earns the same, to 1?

The Gini coefficient was published by the Italian statistician Corrado Gini in 1912; in effect it measures how large an income gap you should expect between two people picked at random, relative to the average.

Which theory says economic agents decide using the best forecasts from all available information?

Rational expectations, proposed by John Muth in 1961, implies that people see predictable policies coming and adjust in advance; Robert Lucas won the 1995 Nobel for building the idea into the analysis of economic policy.

Which country issued a 100 trillion dollar banknote in 2009 as hyperinflation wiped out its currency?

Zimbabwe's official inflation rate reached 231 million percent in July 2008 before the government stopped filing figures, and in April 2009 the country gave up printing its own currency altogether.

What is the term for high inflation and high unemployment striking an economy at the same time?

Stagflation struck in the 1970s, when oil shocks sent prices and unemployment up together; the textbooks of the day said the two moved in opposite directions, so the usual cure for one made the other worse.

What term describes taking on more risk because someone else, such as an insurer, will bear the cost?

Moral hazard is extra risk-taking when someone else bears the cost, which is why insurance policies carry deductibles: a policyholder who must pay the first slice of any loss has a reason to stay careful.

Which measure gives the percentage change in quantity demanded when a good's cost rises 1%?

Price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price; insulin, with few substitutes, is inelastic, while goods with many alternatives see demand swing sharply.

What do economists call a cost, such as rent, that must be paid even when a firm produces nothing?

Fixed cost stays the same whatever the output, which is why a loss-making firm may keep trading for a while: closing would not save it, so sales need only cover the costs of actually producing.

Which principle says adding more of a variable input to a fixed input eventually lowers its marginal product?

The law of diminishing returns says each extra worker on a fixed production line eventually adds less output than the one before, because the same machines and floor space are being shared among more hands.

What concept is the total amount of goods and services buyers want across an economy at a given price level?

Aggregate demand adds up consumer spending, business investment, government purchases and net exports; when it falls short of what the economy is able to produce, firms cut back output and lay off workers.

Which economist's 1942 book popularised 'creative destruction', where innovation kills off old industries?

Joseph Schumpeter developed the idea in Capitalism, Socialism and Democracy out of a close reading of Marx; the endless wiping out of old firms by new ones is sometimes called Schumpeter's gale.

What economic concept refers to the knowledge, skills and attributes embodied in individuals?

Human capital treats schooling and training like investment in machinery: they cost money up front and pay back in higher earnings for years, an idea that helped win Gary Becker the 1992 Nobel.

Garrett Hardin's 1968 essay 'The Tragedy of the Commons' took what overused shared resource as its central example?

A pasture open to all: each herdsman gains by adding one more animal while the damage from overgrazing is shared by everyone, so the commons is ruined; Hardin took the scene from an 1833 pamphlet by William Forster Lloyd.

The Wealth of Nations opens with which workplace to show the division of labour?

A pin factory: one untrained worker could scarcely make a single pin in a day, but ten men splitting the job into about eighteen steps turned out some 48,000; the book appeared in March 1776, months before American independence.

Which cleric argued in 1798 that population would outrun the food supply?

Thomas Malthus argued in his Essay on the Principle of Population that people multiply geometrically while food output grows only arithmetically, so any gain in living standards would soon be eaten up by extra mouths.

Which 1944 book by Friedrich Hayek argued that central planning leads toward tyranny?

The Road to Serfdom was turned down by three US publishers before the University of Chicago Press took it; a 1945 Reader's Digest condensation then put it in front of millions.

The striped 'broken' tulips prized in the Dutch tulip mania were later found to owe their colours to what?

A virus: the infection 'broke' a petal's single colour into flames and streaks, so in the Dutch Republic of the 1630s diseased bulbs sold for more than healthy ones, though no one yet knew they were sick.

George Akerlof's 1970 paper 'The Market for Lemons' took which market as its example?

Used cars: sellers know which ones are 'lemons' and buyers don't, so buyers offer only an average price and owners of good cars stay away; three journals rejected the paper before it helped win Akerlof the 2001 Nobel.

Who in 2009 became the first woman to win the Nobel Memorial Prize in Economics?

Elinor Ostrom, a political scientist by training, shared the 2009 prize with Oliver Williamson for showing that communities can manage shared resources such as fisheries and forests without privatisation or state control.

Which author of a best-selling economics textbook was the first American to win the Nobel economics prize, in 1970?

Paul Samuelson won in 1970, the prize's second year; his textbook Economics, first published in 1948, taught the subject to generations of students, and he advised Presidents Kennedy and Johnson.

What is a market with a single dominant buyer, rather than a single seller, called?

Monopsony, a term Joan Robinson introduced in her 1933 book The Economics of Imperfect Competition, is a market with one dominant buyer; a lone employer in a company town can push wages below what competition would pay.

Which law holds that 'bad money drives out good'?

Gresham's law, named after Tudor financier Sir Thomas Gresham, holds that when debased and full-weight coins must pass at the same face value, people spend the bad and hoard the good, so only bad money circulates.

In November 1923, one US dollar bought roughly how many German marks?

4.2 trillion marks to the dollar was the rate when the new Rentenmark replaced the paper mark in November 1923 at one for a trillion; a Berlin loaf that cost about 160 marks in late 1922 cost 200 billion a year later.

Which country replaced its pengő with the forint in 1946 after the worst hyperinflation ever recorded?

Hungary's prices were doubling roughly every 15 hours in July 1946, the fastest inflation on record; on 1 August the government scrapped the pengő and began again with the forint, which Hungarians still use.

What is 29 October 1929, the Wall Street Crash's day of record selling, called?

Black Tuesday saw more than 16 million shares change hands as prices collapsed; five days earlier, on Black Thursday, leading bankers had steadied the market by buying stock, but the calm did not last.

Which US president signed the protectionist Smoot–Hawley Tariff Act in June 1930?

Herbert Hoover had promised farmers higher duties on crops in 1928, but Congress stretched the bill to cover industry too; he signed it under pressure from his own party, despite a petition from 1,028 economists urging a veto.

The 1944 Bretton Woods conference that created the IMF met in which US state?

The conference met at the Mount Washington Hotel in Bretton Woods, New Hampshire, in July 1944, where delegates from 44 Allied nations agreed a system that tied their currencies to the dollar for the next quarter-century.

Which of these then-EU members kept its own currency when euro cash arrived in 2002?

The UK kept the pound under an opt-out it had negotiated in the Maastricht Treaty; twelve countries switched to euro notes and coins on 1 January 2002, while Denmark and Sweden also stayed outside.

Which South American country joined four Middle Eastern states to found OPEC in Baghdad in 1960?

Venezuela's oil minister Juan Pablo Pérez Alfonzo was the driving force behind OPEC together with Saudi Arabia's Abdullah Tariki; a journalist had introduced the two men at an oil congress in Cairo the year before.

Which US president ended the dollar's direct convertibility into gold in August 1971?

Richard Nixon announced it on television on Sunday 15 August 1971, together with a 90-day freeze on wages and prices and a 10 percent surcharge on imports; the package became known as the Nixon shock.

'Supply creates its own demand' sums up a law named after which French economist?

Jean-Baptiste Say argued in his 1803 Treatise on Political Economy that producing goods generates the income that buys them; the famous five-word summary is a paraphrase from the 1930s, not Say's own wording.

Which psychologist won the 2002 Nobel economics prize for work on judgment and decisions?

Daniel Kahneman shared the 2002 prize with Vernon Smith for bringing psychology into economics; he wrote that Amos Tversky, his collaborator of many years, would have shared it had he not died in 1996.

Richard Thaler and Cass Sunstein's 2008 book on 'choice architecture' was titled what?

Nudge (2008) argued that how choices are presented, their 'choice architecture', steers decisions without banning options; the 2021 'final edition' added a chapter on 'sludge', the friction that makes cancelling harder than signing up.

In which game-theory puzzle do two players each gain by betraying the other, yet both lose out if both betray?

The prisoner's dilemma was devised in 1950 by Merrill Flood and Melvin Dresher at the RAND Corporation; the mathematician Albert Tucker then recast the payoffs as prison sentences to explain it to an audience of psychologists.

Ronald Coase's 1960 article on transaction costs and property rights was titled what?

The Problem of Social Cost (1960) argued that with costless bargaining, who holds a right does not affect efficiency, but Coase's real point was that bargaining is usually costly; George Stigler later dubbed the idea the Coase theorem.

Purchasing power parity compares currencies by pricing what in each country?

A basket of goods and services is priced in each country, and the PPP rate is the exchange rate at which it would cost the same in both; statisticians use such rates to compare the real size of economies.

Which 18th-century French school, led by François Quesnay, held that farming was the only true source of wealth?

Physiocracy grew up around Quesnay, a physician by training, and held that agriculture alone creates new wealth while trade and manufacturing merely pass it around, so its followers wanted farm produce to fetch high prices.

Who coined 'the dismal science' as a jab at economics in 1849?

Thomas Carlyle coined 'the dismal science' in his 1849 'Occasional Discourse on the Negro Question', attacking economists who backed free labour markets over slavery; he meant it as a contrast with 'the gay science', a name for poetry.

Simon Kuznets, who pioneered GDP in the 1930s, warned against using it to measure what?

A nation's welfare can scarcely be inferred from national income, Kuznets wrote in the very report that set out the accounts, because the totals ignore how income is shared out and how hard the work of earning it is.

'Dutch disease' was coined in 1977 after the discovery of a huge field of what?

A British magazine coined 'Dutch disease' in 1977 for what followed the 1959 discovery of the giant Groningen natural gas field: gas exports pushed up the guilder and left Dutch manufacturing uncompetitive.

Funding Concorde long after it stopped making sense is the textbook example of what?

The sunk cost fallacy is letting money already spent, which cannot be recovered, drive a decision; Britain and France kept funding Concorde that way, so biologists Dawkins and Carlisle dubbed it the 'Concorde fallacy' in 1976.

The world's oldest 'modern' stock exchange was founded in 1602 in which city?

The Amsterdam exchange opened in 1602 so that investors could trade shares in the newly chartered Dutch East India Company; it is usually called the first modern stock exchange.

Lehman Brothers' September 2008 collapse was, at the time, the largest what in US history?

Lehman's bankruptcy filing on 15 September 2008 involved more than $600 billion in assets, still the largest on record as of 2025; the bank's collapse put tens of thousands of jobs at risk around the world.

On Black Monday in 1987, the Dow Jones lost roughly what share of its value in a single day?

About 23%: the Dow fell 22.6% on 19 October 1987, a one-day record that still stood in 2025; the New York Stock Exchange responded with 'circuit breakers' that halt trading after a steep fall.

Which scientist lost a fortune when Britain's South Sea Bubble burst in 1720?

Isaac Newton lost at least £10,000 when South Sea Company shares collapsed; asked earlier how long they would keep rising, he is said to have replied that he could not calculate the madness of people.

Kenneth Arrow's impossibility theorem, proved in 1950, is a result about what?

Voting systems: Arrow proved that no way of turning voters' rankings of three or more options into a group ranking can meet a short list of reasonable fairness conditions, unless it simply follows a single voter.

Engel's law says that as a family's income rises, the share it spends on what falls?

Food takes a shrinking share of the budget as income rises, Ernst Engel found in 1857; spending on it still grows, only more slowly, and many poverty lines are built on the ratio.

Jevons's 1865 paradox noted that efficiency gains increased British use of what?

In The Coal Question (1865) William Stanley Jevons observed that Watt's more efficient steam engine made coal cheaper to use, so Britain burned far more of it; the same 'rebound effect' dogs energy-efficiency policy.

Which country's 'Lost Decade' followed the bursting of its property and share-price bubble around 1990?

Japan's Nikkei share index hit its bubble-era peak on 29 December 1989 and took 34 years to regain it, finally passing the old record in 2024; the slump ran so long that people now speak of Lost Decades.

In 1911 the US Supreme Court ordered the breakup of which corporate trust?

The Court's May 1911 ruling split Standard Oil into dozens of separate companies, including the ancestors of Exxon, Mobil and Chevron; Ida Tarbell's 1904 muckraking history of the trust had helped bring the case.

The 1933 Glass–Steagall Act walled off US commercial banks from what business?

The Banking Act of 1933, sponsored by Senator Carter Glass and Representative Henry Steagall, barred commercial banks from investment banking such as underwriting securities; the Gramm–Leach–Bliley Act repealed that separation in 1999.

The 'impossible trinity' says a country cannot combine free capital flows and an independent monetary policy with what?

A fixed exchange rate is the third leg, and only two of the three can be had at once: euro members kept fixed rates and free capital flows, and gave up setting interest rates of their own.

Which French economist's 2013 bestseller 'Capital in the Twenty-First Century' argued that wealth grows faster than the wider economy?

Thomas Piketty argued that fortunes concentrate whenever the return on capital outpaces economic growth; in January 2015 he turned down France's Legion of Honour, saying it was not for a government to decide who is honourable.

Which economist insisted that inflation is 'always and everywhere a monetary phenomenon'?

Milton Friedman wrote the line in 1963, arguing that prices keep rising only when the money supply grows faster than output; his work on monetary history and theory was cited when he won the 1976 Nobel.

The 'paradox of value' contrasts cheap, essential water with what pricey item?

Diamonds: the paradox asks why a near-useless gem costs more than the water we cannot live without; later economists answered that price tracks the usefulness of one extra unit, and one more glass of water is worth little.

What is currency called when it is backed by neither gold nor any other commodity?

Fiat money has value only because a government declares it legal tender; Kublai Khan's China made paper notes its main currency in the 13th century, and since the dollar left gold in 1971 every major currency has been fiat.

Which Fed chairman warned of 'irrational exuberance' in a December 1996 speech?

Alan Greenspan asked, in a 5 December 1996 speech at the American Enterprise Institute, how anyone could know when 'irrational exuberance' had pushed asset prices too high; Robert Shiller borrowed the phrase for his 2000 book.

Mercantilists measured a nation's wealth mainly by its stock of what?

Gold and silver were what mercantilists counted as national wealth, hence their obsession with trade surpluses: sell more abroad than you buy and bullion flows in. The Wealth of Nations spent many pages attacking the idea.

Wassily Leontief won the 1973 Nobel for which tool, used to map a whole economy industry by industry?

Input–output tables track how each industry's output becomes other industries' inputs, so a change in one sector can be traced through all the rest; Leontief set the method out in full in a 1941 study of the American economy.

Baumol's 'cost disease' was first described in a 1960s study of which sector?

Performing arts: Baumol and Bowen noted in the 1960s that a string quartet takes the same four players just as long to perform as it did a century before, yet musicians' pay has to keep pace with sectors where productivity soars.

The 1949 MONIAC computer modelled the British economy using flows of what?

Water, dyed and pumped through transparent tanks and pipes, stood for money flowing round the economy; its New Zealand-born inventor built the prototype in a Croydon garage from war-surplus parts, including bits of Lancaster bombers.

Muhammad Yunus won the 2006 Nobel Peace Prize for pioneering which kind of lending to the poor?

Microcredit means small loans made without collateral to people too poor for ordinary banks; Yunus began in the 1970s by lending to villagers near his university in Bangladesh, and the Grameen Bank he founded shared the prize.

The 1997 Asian financial crisis began in July with the collapse of which currency?

The Thai baht's float on 2 July 1997, after Thailand ran down its reserves defending the dollar peg, started what Thais call the 'Tom Yum Kung crisis'; the contagion then spread to Indonesia, Malaysia and South Korea.

In 2010, Florida programmer Laszlo Hanyecz famously paid 10,000 bitcoins for two of which takeaway item?

Pizzas from Papa John's became the first notable purchase of physical goods with bitcoin. A 19-year-old Californian ordered them for delivery and pocketed the coins.

Which pseudonymous author posted the 2008 white paper that introduced Bitcoin to a cryptography mailing list?

Satoshi Nakamoto titled the paper 'Bitcoin: A Peer-to-Peer Electronic Cash System' and stopped communicating in April 2011, leaving the owner of the name a mystery.

Which English textile workers smashed factory machines in the 1810s and now lend their name to technophobes?

The Luddites signed their threats to mill owners 'Ned Ludd', the name of a legendary weaver. Their machine-breaking raids began in Nottingham in 1811.

Which country used paper money for centuries before Marco Polo described the notes in his famous Travels?

China had true paper money, called jiaozi, by the 11th century under the Song dynasty. Polo gave a whole chapter to how the Great Khan made tree bark pass for money.

Which Asian kingdom's fourth king declared 'Gross National Happiness' more important than Gross Domestic Product?

Bhutan wrote Gross National Happiness into its 2008 constitution as a goal of government. King Jigme Singye Wangchuck had first voiced the idea in 1972.

Which Florentine family ran the largest European bank of the 15th century and bankrolled Renaissance artists?

The Medici bank was set up in Florence in 1397 by Giovanni di Bicci de' Medici. Under his son Cosimo, who sent the sculptor Donatello money for marble, the family became Florence's unofficial heads of state.

Which carmaker astonished the world in 1914 by more than doubling most workers' pay to five dollars a day?

Ford lifted its daily minimum from $2.34 to $5 to stop constant staff turnover. The best mechanics in Detroit flocked to the company and productivity climbed.

Which Kentucky army post has sat beside a fortified US government gold vault since the 1930s?

Fort Knox's vault also sheltered the original Constitution and Declaration of Independence during World War II. 'As safe as Fort Knox' became a byword for security.

Which animal names a stock market that has fallen 20% or more, a label born in 18th-century London?

Bear comes from London's 'bear-skin jobbers', traders who sold the bear's skin before catching the bear: shares they did not yet own.

What name is given to swapping goods directly without money, a system that needs a 'double coincidence of wants'?

Barter only works when each side wants exactly what the other is offering. Money gets round the problem: a baker can sell bread to anyone and buy shoes later.

Which worldwide slump of the 1930s pushed the United States' unemployment rate to roughly 25 percent?

The Great Depression also put about 9,000 of America's 25,000 banks out of business by 1933. Savers' deposits were uninsured, so Congress created the FDIC that year to restore trust in banks.

Which financier locked New York's bankers in his library during the Panic of 1907 until they agreed to a rescue?

J. P. Morgan pocketed the key to force a solution, having already pledged large sums of his own money. The scare led to a commission whose work produced the Federal Reserve System.

Which investor, nicknamed the 'Oracle of Omaha', turned a textile manufacturer into the Berkshire Hathaway conglomerate?

Warren Buffett's investment firm took over the textile company and gave its name to a diversified holding company. He became its chairman in 1970.

Which '80/20 rule' takes its name from an Italian economist who studied the unequal ownership of property?

The Pareto principle was developed by engineer Joseph Juran, who read Vilfredo Pareto's work and applied the pattern to quality control. He called the 20% of causes that matter the 'vital few'.

Which Swiss mountain resort hosts the World Economic Forum's annual January meeting of politicians and executives?

Davos first hosted the event in 1971, when Klaus Schwab invited 450 European executives to study American management methods. The forum only took its present name in 1987.

Which Scottish-born steel magnate wrote 'The Gospel of Wealth' and paid for more than 2,500 libraries?

Andrew Carnegie argued that the rich should use their fortunes to improve society. A town got its library only by pledging yearly upkeep, and his buildings reached as far away as Fiji.

What name is given to the illegal trade that flourished under World War II rationing and price controls?

The black market grows whenever the law caps prices or restricts supply. In wartime, some farmers under-reported how many animals had been born and sold the extra meat on the side.

Which basic problem, central to Lionel Robbins's definition of economics, arises because resources are limited?

Scarcity means wants outrun the means to satisfy them, so every society has to choose. Robbins called economics the study of 'ends and scarce means which have alternative uses'.

What term describes a general fall in prices, the problem Japan battled after its early-1990s market collapse?

Deflation tempts shoppers to put off purchases until prices drop further. That cuts spending, idles factories and can push prices lower still.

A pin factory where ten workers made 48,000 pins a day famously opens 'The Wealth of Nations' to illustrate what?

Division of labour split pin-making into about eighteen separate operations. Working alone, the book reckons, a man could not make twenty pins a day, and perhaps not even one.

What is a group of rival producers that agrees to limit output or fix prices called, as OPEC does with oil?

A cartel lifts prices above the competitive level by getting rivals to stop undercutting one another. Rubber producers once ran an international agreement on the same lines.

What kind of tax system, like the United States' federal brackets on wages, charges a higher rate as earnings rise?

Progressive taxes can rise by stealth: if the brackets are not adjusted as wages climb, pay rises push people into higher bands. The effect is known as bracket creep.

Which economist's name is attached to the 'moment' when a long credit boom suddenly collapses, a term coined in 1998?

Hyman Minsky argued that financiers periodically act as arsonists who set the whole economy ablaze. Fund manager Paul McCulley coined the phrase during Russia's 1998 financial crisis.

What problem arises when ships use a lighthouse or crowds watch fireworks without paying towards the cost?

Free riding leaves such things underfunded: one more spectator does not use up the fireworks, and nobody can be turned away for not paying.

Crowds of depositors rushing to withdraw their savings, as at Britain's Northern Rock in 2007, are known as what?

A bank run can become a self-fulfilling prophecy, because every withdrawal makes failure more likely and so prompts more. Northern Rock's was Britain's first in more than a century.

Which doctrine of leaving markets alone takes its name from merchants' reported reply to Louis XIV's minister Colbert?

Laissez-faire is traced to merchants who met French finance minister Colbert around 1681. Asked how the state could help their trade, one is said to have replied, 'Leave it to us.'

What term, from the Old French for a lord's right to mint money, names a government's profit from issuing currency?

Seigniorage is the gap between money's face value and the cost of making it. A State Quarter cost about five cents to mint, so every one a collector kept was profit for the US government.

Which three-letter abbreviation names a company's first sale of shares to the public, also called a stock launch?

IPO stands for initial public offering, the moment a private firm's shares first go on general sale. Oil giant Saudi Aramco raised $25.6 billion when it listed in 2019.

Which Franklin D. Roosevelt programme created Social Security and the bridge-building Works Progress Administration?

The New Deal arrived when America had no national safety net and no public unemployment insurance. Its Social Security Act brought in pensions for senior citizens.

Which US aid programme, named after a Secretary of State, sent $13.3 billion to rebuild Europe after World War II?

The Marshall Plan was offered to the Soviet Union and its allies too. Moscow refused the aid and blocked Eastern Bloc countries such as Poland and Romania from taking it.

Isaac Newton reportedly said he could not calculate 'the madness of people' about which British share craze of 1720?

The South Sea Bubble carried the company's shares from about £100 to £1,000 by August 1720. They were back at £100 before the year was out, and thousands of investors were ruined.

Which late-1990s stock mania peaked in March 2000 and sank the grocery-delivery start-up Webvan?

The dot-com bubble sent the Nasdaq Composite index up 600% in five years. Within three years of the peak the index had fallen 78%, giving back the whole gain.

What label is given to risky home loans made to borrowers with weak credit histories, as in America's 2007–2008 crisis?

Subprime lending boomed on easy credit and a belief that house prices would keep climbing. Many borrowers had taken adjustable-rate mortgages on that assumption.

Which Houston energy firm, Fortune's 'Most Innovative Company' six years running, collapsed in a 2001 accounting fraud?

Enron held the Fortune title every year from 1996 to 2001. That March, a Fortune article had pointed out that no one understood how the company made its money.

Which president's tax-cutting plans did George H. W. Bush, his future vice president, mock as 'voodoo economics'?

Ronald Reagan went on to cut the top federal tax rate from 70% to 50% in 1981 and to 28% in 1986. Bush repudiated his 'voodoo' jibe while serving as his deputy.

Which country's 1990s boom was dubbed the 'Celtic Tiger', echoing the fast-growing 'tiger' economies of East Asia?

Ireland's nickname is first recorded in a 1994 report by Kevin Gardiner. The boom, fuelled by foreign direct investment, lasted until the late 2000s.

Which tax did William Pitt the Younger bring in from 1799 to pay for Britain's war with revolutionary France?

Income tax started at two old pence in the pound on earnings over £60. Pitt hoped it would raise £10 million a year, but the first year brought in only a little over £6 million.

Which institution, founded in 1694 to manage government debt, is nicknamed 'The Old Lady of Threadneedle Street'?

The Bank of England took the nickname from a 1797 satirical cartoon by James Gillray. It stayed in private hands until Clement Attlee's government nationalised it in 1946.

Which Geneva-based body replaced the GATT agreement in 1995 as the referee of global trade rules?

The WTO was set up under the Marrakesh Agreement, signed in Morocco in April 1994 at the end of the Uruguay Round of talks. GATT itself dated from 1948.

Which country is home to Grameen Bank, the microcredit pioneer that shared the 2006 Nobel Peace Prize with its founder?

Bangladesh's Grameen Bank grew out of Muhammad Yunus lending a total of $27 to 42 people, mostly bamboo-stool makers. It lends to the poor without asking for collateral.

Which investor made over £1 billion betting against sterling on 'Black Wednesday' in September 1992?

George Soros judged that Britain had joined Europe's Exchange Rate Mechanism at too high a rate. When the government was forced to pull the currency out, his position paid off.

Which 2005 bestseller by Steven Levitt and Stephen Dubner uses economics to expose cheating among sumo wrestlers?

Freakonomics also compares the Ku Klux Klan with real-estate agents. It had sold over 4 million copies by late 2009 and grew into a film, a radio segment and a sequel.

Which accounting system did friar Luca Pacioli, a collaborator of Leonardo da Vinci, describe in print in 1494?

Double-entry bookkeeping records every transaction as equal and opposite debits and credits, which is where 'balancing the books' comes from. Pacioli's textbook was published in Venice.

Which law, named after a British economist, warns that a measure stops being a good measure once it becomes a target?

Goodhart's law is named after Charles Goodhart, who set out the idea in a 1975 article on British policy. A close cousin, the Lucas critique, followed a year later.

Which ancient kingdom in what is now Turkey, later ruled by the wealthy Croesus, is credited with the first coins?

Lydia struck its coins from electrum around the 7th century BC, and they are among the oldest in existence. The kingdom's capital was Sardis.

Which British import duties did Robert Peel repeal in 1846, during the Irish famine, against most of his own party?

The Corn Laws went because the famine made new supplies urgent. Peel, a Conservative, needed Whig votes to do it, and historians see the repeal as Britain's decisive turn to free trade.

Which Indian economist, author of 'Poverty and Famines', won the 1998 Nobel prize for his work on welfare economics?

Amartya Sen argued that people can starve without any overall shortage. In Bengal, he found, a city boom pushed prices beyond rural workers whose wages had not kept up.

Which 1992 accord founded the European Union and promised the eventual introduction of a single currency?

The Maastricht Treaty was agreed by the twelve members of the European Communities. It also created a shared European citizenship and gave the European Parliament more power.

Which British bank installed a pioneering cash machine at its Enfield branch in June 1967, opened by actor Reg Varney?

Barclays beat a Swedish rival's machine into service by just nine days. The design came from a team led by John Shepherd-Barron at the banknote printer De La Rue.

Which trading venture, founded by London merchants in 1600, came to command armies about 260,000 strong?

The East India Company's forces were at times twice the size of the British Army. It ruled much of India itself until the Crown took over in 1858, after the great rebellion.