Ten questions on currencies, prices and the terms behind the news, each translated into plain language.
Most economic vocabulary is used confidently and understood loosely. This quiz pins down the common terms, inflation, GDP, recession, interest rates, and covers the currencies and the long history of money as a technology. It includes cryptocurrency, since it is now part of the same conversation. The explanations give the plain-English meaning and stop short of the arguments economists are still having, which are flagged as such rather than settled here.
Every question in this quiz is listed below with its correct answer and the reasoning behind it. Play first if you would rather not see the answers — or read through as a study sheet.
Play it insteadAnswer: C. The yen
Why: Japan uses the yen, whose name derives from a word meaning round object. The won is Korean and the yuan Chinese.
Answer: B. A general rise in prices over time
Why: Inflation means each unit of currency buys slightly less than before. Most central banks target a low positive rate rather than zero.
Answer: A. Gross Domestic Product
Why: GDP measures the total value of goods and services produced in a country over a period. It is widely used and widely criticised, since it ignores unpaid work and distribution.
Answer: D. Interest rates
Why: Raising rates makes borrowing costlier, which tends to slow spending and cool prices. The other levers listed belong to governments rather than central banks.
Answer: D. The euro
Why: The euro entered circulation as cash in 2002 and is used by twenty EU member states. The franc, mark and lira are among the currencies it replaced.
Answer: B. Adam Smith
Why: Smith published it in 1776, arguing that self-interested exchange can produce broad benefit. It is generally treated as the founding text of modern economics.
Answer: C. Two consecutive quarters of falling GDP
Why: The two-quarter rule is the common shorthand used in the press. Some official bodies use broader judgements taking in employment and income.
Answer: D. A cryptocurrency
Why: It runs on a distributed ledger rather than being issued by a state. Its supply is capped by its own rules rather than set by a central bank.
Answer: D. It rises
Why: Scarcity relative to demand pushes prices up until the two balance again. This is the most basic mechanism in market pricing.
Answer: B. Gold
Why: Under the gold standard, paper money could be exchanged for a fixed quantity of gold. Most countries had abandoned the arrangement by the early 1970s.
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Where ordinary words and objects actually came from.
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