Christmas Quiz 2016

Our Christmas Quiz offers an eclectic test of knowledge of economics and business. The answers, and a brief explanation of the factors at work, are at the end of this note.

1. Which of the following countries is likely to show the fastest growth of the seven major industrialised nations this year?

Germany

Japan

2.Transparency International's Corruption Perceptions Index ranks 176 countries around the world on levels of public sector corruption, based on the perceptions of public and private sector institutions that operate there. Which of these countries is ranked as having the least corrupt public sector last year?

Denmark

South Korea

Uruguay

Italy

3. Which of the following countries has the most undervalued – or cheapest - housing market, according to The Economist’s house price affordability index?

Canada

Britain

Australia

Germany

Japan

4. In which country do employees work the longest hours each year?

Germany

Mexico

Japan

USA

Greece

5. Three of the following were added to the basket of goods used to calculate the Consumer Price Index (CPI) in the UK this year and three were removed. Which were added?

Nightclub tickets

Microwave rice

Coffee pods

Computer software downloads

Cooked, sliced turkey

CD-Rom

6. Britain’s Brexit vote provoked strong reactions. Match the quotes to the people:

Alex Tsipras

Donald Trump

George Soros

Geert Wilders

Dutch Prime Minister Mark Rutte

Francois Hollande

“Brexit is a wakeup call for the sleepwalker who is heading towards the abyss…We must not put the blame on the British people… The arrogant words of technocrats angered people. We need progressive reforms to raise a wall against Europskepticism.”

“I think it's a great thing that happened, an amazing vote, very historic. We're very happy.”

“The UK has decided to do a Brexit, I believe even a hard Brexit. Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.”

“Now the catastrophic scenario that many had feared has materialised, making the disintegration of the EU practically irreversible.”

"England has collapsed, politically, constitutionally and economically."

"Hurray for the British! Now it is our turn."

7. 8Which of the following cities is ranked as the world’s most liveable, according to the Economist Intelligence Unit’s annual liveability index?

Melbourne

Vienna

Paris

Honolulu

8.Which of the following institutions is the most trusted by American citizens?

Banks

Big business

The military

Congress

Small business

9. UBS regularly tracks prices for a basket of luxury goods in different parts of the world. In October where was it cheapest to buy a Louis Vuitton (Speedy 30) handbag, in US dollar terms?

China

France

London

10. Which country has had the world’s highest average inflation rate this year?

Venezuela

Zimbabwe

Japan

Argentina

11. Which city is now the home to the most billionaires?

Beijing

New York

London

Moscow

12. In a year of surprises, which event was given the lowest probability of occurring by UK bookmakers* in the week before it happened?

UK vote to leave the EU (June 23rd)

Donald Trump elected as US President (November 8th)

Theresa May becoming UK Prime Minister (13th July)

13. With investors facing increasingly low returns from many traditional investments, the case for investing in alternative assets such as wine, classic cars, stamps and whisky has become more tempting. Which of these alternative assets performed best in the year to Q1 2016?

Classic cars

Wine

Antique furniture

Art

14. In a blind test of champagnes by a panel of experts conducted by Which? magazine Aldi’s Veuve Monsigny Champagne Brut scored 78%, higher than the more expensive Veuve Clicquot Yellow Label Ponsardin NV Champagne (72%). The Veuve Clicquot costs £35 a bottle; how much does the Aldi champagne cost?

£14.99

£9.99

£19.99

15. Since the 1950s the share of the world’s population living in cities has risen sharply. The UN predicts that 70% of the world’s population will live in urban areas by 2050. What has been one of the indirect consequences of increased urbanisation in the UK?

The price of farmland has dropped

Dogs are getting smaller

Demand for tweed has declined

16. In which of the following countries is it possible to most swiftly provide a permanent electricity connection to a newly constructed warehouse?

Bangladesh

China

South Korea

17. Statutory parental leave packages vary widely among OECD nations. Some offer long leave periods on a fraction of the full pay; others offer little leave at full pay. One measure that allows comparison of different regimes is the length of the leave that would be covered if it were paid at 100% of the average worker’s salary. Which of the following countries provides the longest full-pay equivalent leaves to new parents?

Estonia

France

What proportion of UK adults check their mobile phones in the middle of night?

One in three

One in ten

One in seven

Answers...

Which of the following countries is likely to show the fastest growth of the seven major industrialised nations this year?

Germany

Japan

Answer: UK. The UK economy has been unexpectedly resilient in the face of the Brexit vote and is expected to grow by 2.0% this year, roughly in line with its trend rate. Germany is likely to be the G7’s second fastest growing economy, posting growth of 1.7% in 2016. The US is expected to grow by 1.6% this year, below its long-term trend rate. However, since the US elections economists have upgraded their forecasts for US growth in 2017 on the basis that the new Administration is likely to cut taxes and boost infrastructure spending. Japan is forecast to grow by just 0.5% this year, the slowest rate among G7 nations.

Transparency International's Corruption Perceptions Index ranks 176 countries around the world on levels of public sector corruption, based on the perceptions of public and private sector institutions that operate there. Which of these countries is ranked as having the least corrupt public sector last year?

Denmark

South Korea

Uruguay

Italy

Answer: Denmark. Transparency International's Corruption Perceptions Index finds that 68% of countries worldwide have a serious corruption problem. No country is corruption-free but the least corrupt country on the list is Denmark, while Finland and Sweden are in second and third place. The highest scoring developing nation is Uruguay (21st), while Italy scores poorly for a developed nation (61st). South Korea, whose government faced a political crisis in November in the wake of allegations that the President’s adviser exercised undue influence over her, ranks 37th.

Which of the following countries has the most undervalued – or cheapest - housing market, according to The Economist’s house price affordability index?

Canada

Britain

Australia

Germany

Japan

Answer: Japan. To determine whether homes are fairly valued The Economist looks at the relationship between house prices and disposable income, and between house prices and rents. More than two decades of weak growth mean that property prices in Japan have stagnated or fallen even as prices in other developed markets have soared. Japanese housing therefore rates as being undervalued relative to rents and incomes. German housing is the second most affordable in this group. Using an average of the Economist’s two valuation measures housing is more than 40% overvalued in Australia, Britain and Canada.

In which country do employees work the longest hours each year?

Germany

Mexico

Japan

USA

Greece

Answer: Mexico. The average Mexican worked 2,246 hours in 2015, 63% more than the average German at 1,371 hours a year. People in countries with high levels of productivity tend to work fewer hours. Thus Germans, who have among the highest rates of productivity in the world, produce more in a relatively short working week than many other countries with far long work weeks. The Greeks also work very long hours, some 2,026 a year. Americans work longer hours than most Europeans (1,790 hours). The Japanese work famously long hours, 1,719 a year, but this total has fallen markedly in the last 25 years.

Three of the following were added to the basket of goods used to calculate the Consumer Price Index (CPI) in the UK this year and three were removed. Which were added?

Nightclub tickets

Microwave rice

Coffee pods

Computer software downloads

Cooked, sliced turkey

CD-Rom

Answer: Nightclub tickets, CD Roms and sliced turkey were removed from the basket of 704 items the Office of National Statistics (ONS) uses to calculate UK inflation. CD-Roms were removed to reflect the shift from physical media towards downloadable files and computer software downloads were added. Other additions to the basket included coffee pods and cream liqueur while microwave rice was added reflecting the long-term trend towards prepared foods. The decline of Britain’s nightclub scene led to the departure of admission prices to nightclubs from the basket.

Britain’s Brexit vote provoked strong reactions. Match the quotes to the people:

Alex Tsipras

Donald Trump

“I think it's a great thing that happened, an amazing vote, very historic. We're very happy.”

Francois Hollande

“The UK has decided to do a Brexit, I believe even a hard Brexit. Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.”

George Soros

“Now the catastrophic scenario that many had feared has materialised, making the disintegration of the EU practically irreversible.”

Dutch Prime Minister Mark Rutte

"England has collapsed, politically, constitutionally and economically."

Geert Wilders

"Hurray for the British! Now it is our turn."

Which of the following cities is ranked as the world’s most liveable, according to the Economist Intelligence Unit’s annual liveability index?

Melbourne

Vienna

Paris

Honolulu

Answer: Melbourne. Melbourne tops the list for the sixth year in a row, closely followed by the Vienna. Cities with high scores on this measure tend to be mid-sized cities in wealthier countries with relatively low population density. The only cities in the top ten that are not in Australia or Canada are Vienna, Auckland, Helsinki and Hamburg. The rankings of big cities including New York, London, Paris and Tokyo tend to suffer because of relatively high levels of crime, congestion and problems with public transport.

Liveability has deteriorated in 29 of the 140 cities surveyed over the last 12 months. The perceived quality of life in Western Europe declined partly as a result of concerns about terrorism. Paris has seen one of the biggest declines in liveability scores over recent years “due to a mounting number of terrorist attacks taking place in the city, and other parts of the country, over the last three years.” Honolulu has seen one of the biggest improvements over the last five years and is now ranked 17th overall.

Which of the following institutions is the most trusted by American citizens?

Banks

Big business

The military

Congress

Small business

Answer: 73% of Americans surveyed by Gallup say they have a great deal or quite a lot of confidence in the military. Gallup asks Americans about their confidence in 14 institutions every year. Confidence in many institutions declined during the global financial crisis and has not recovered. Confidence in politicians and big business has fallen markedly, although support for the military and small business has risen. Just 9% of respondents say they have either a great deal or quite a lot of confidence in Congress, down from 30% in 2004. 27% have confidence in banks compared to 53% in 2004. Only 18% of respondents had confidence in big business but 68% had confidence in small business.

UBS regularly tracks prices for a basket of luxury goods in different parts of the world. In October where was it cheapest to buy a Louis Vuitton (Speedy 30) handbag, in US dollar terms?

China

France

London

Answer: London. The price of a Louis Vuitton bag in London was $802 on 7th October, compared to $850 in France, $970 in the US and $1,115 in China. Since Britain voted in June to leave the European Union sterling has fallen sharply - by 16% between June 23rd and the start of December against the US dollar. Most luxury-goods makers are protected by large margins and have not yet raised their prices. That has made the UK the least expensive market in the world for a variety of luxury goods, according to UBS. Significant savings could also be made by Chinese and European shoppers on Balenciaga Foulard Fringe dresses, Loewe Elephant purses and Brunello Cucinelli cashmere V-neck sweaters.

Visitors have clearly spotted the opportunities. Spending in the UK by foreign visitors on items for which buyers seek tax refund rose more than 36% in the year to August.

Which country has had the world’s highest average inflation rate this year?

Venezuela

Zimbabwe

Japan

Argentina

Answer: Venezuela. Many of the world’s highest rates of inflation can be found in South America. Falling oil prices have hit Venezuela, whose main export is oil, hard. A government debt crisis and a sclerotic and socialised economy have added to the nation’s woes and caused a collapse in the value of the Venezuelan Bolivar. Venezuelan prices have risen by more than 700% this year and the IMF predict inflation of over 2,000% in 2017. Hyperinflation has left people struggling to carry sufficient cash, with consumers having to use carrier bags and rucksacks to carry enough for relatively modest spending. The BBC reports that a jar of Nutella, which retails in the UK for £3.50, costs around £11 on the Venezuelan black market, equivalent to half the monthly minimum wage.

Argentinian inflation is likely to come in at about 40% this year, having ran at double-digit rates for many years.

Following a period of hyperinflation, Zimbabwe is experiencing sharp deflationary pressures. In 2008 the annual inflation rate peaked at 89.7 sextillion per cent (89.7 followed by 20 zeros). Having ceased printing the Zimbabwe dollar in 2009 and moved to a hard currency regime dominated by the US dollar, deflation has set in as demand shrinks and cash-strapped companies lay off staff or stop paying wages.

Japan has been running the lowest rate of inflation in the developed world for many years.

Which city is now the home to the most billionaires?

Beijing

New York

London

Moscow

Answer: Beijing. Beijing has overtaken New York as the city with the highest number of billionaires (in US dollar terms) according to research by China-based firm Hurun. A total of 100 billionaires live in the Chinese capital, compared with 95 in New York, the report says. Moscow (66) comes in third place with London in fifth (50). China has overtaken the US as the country with the highest number of billionaires although eight of the world’s top ten billionaires are still American. Bill Gates and Warren Buffet take the top two places, with Jeff Bezos of Amazon in fourth and Mark Zuckerberg of Facebook sixth.

In a year of surprises, which event was given the lowest probability of occurring by UK bookmakers* in the week before it happened?

UK vote to leave the EU (June 23rd)

Donald Trump elected as US President (November 8th)

Theresa May becoming UK Prime Minister (13th July)

Answer: Among a host of big votes in 2016, victory for Mr Trump was the biggest surprise for those placing bets. In the week before the US presidential election the implied probability of a win for Mr Trump based on betting odds was 27%.

The bookmakers’ odds implied a 31% probability of a vote to leave the EU in the week before the poll.

Theresa May was the clear favourite among bookmakers to become Prime Minister after Boris Johnson dropped out of the contest. The odds on Mrs May winning were 1/5, giving her an 83% implied probability of victory over rivals Andrea Leadsom and Michael Gove.

*odds from Paddy Power

With investors facing increasingly low returns from many traditional investments, the case for investing in alternative assets such as wine, classic cars, stamps and whisky has become more tempting. Which of these alternative assets performed best in the year to Q1 2016?

Classic cars

Wine

Antique furniture

Art

Answer: Classic cars. Classic cars were the top performing luxury asset rising by 17% according to the Knight Frank Luxury Investment Index. Wine saw the second strongest growth, rising 9%, with coins in third position, rising 6%. Art and furniture were the biggest losers, dropping by 5% and 6%, respectively. Some analysts argue that the art market is currently overvalued – with a report from the University of Luxembourg this year concluding that there is the potential for a “severe correction” in the post-war and contemporary and American segments.

In a blind test of champagnes by a panel of experts conducted by Which? magazine Aldi’s Veuve Monsigny Champagne Brut scored 78%, higher than the more expensive Veuve Clicquot Yellow Label Ponsardin NV Champagne (72%). The Veuve Clicquot costs £35 a bottle; how much does the Aldi champagne cost?

£14.99

£9.99

£19.99

Answer: £9.99. The Aldi champagne costs £9.99 but won praise for its “excellent balance and freshness.” The panellists said it tasted “creamy, yeasty and savoury” and one considered it “not mega-refined but flavoursome and enjoyable’.”

Since the 1950s the share of the world’s population living in cities has risen sharply. The UN predicts that 70% of the world’s population will live in urban areas by 2050. What has been one of the indirect consequences of increased urbanisation in the UK?

The price of farmland has dropped

Dogs are getting smaller

Demand for tweed has declined

Answer: Dogs are getting smaller. Analysis by The Economist using data supplied by the Kennel Club, a dog lover’s association, shows that the weight of the average British puppy fell by about 12% between 2005 and 2015. The trend is in part attributed to an increase in city living and the fact that, as house prices have risen, the rate of overcrowding (as measured by the number of people per bedroom) in private rented households has increased by one-third. Smaller and more cramped houses need smaller pets, and in the past decade the number of pugs registered each year has jumped by nearly 300%. Registrations of stockier bull terriers have fallen by over 50%.

The price of British farmland has risen sharply over the past 15 years or so, driven by a shortage of new supply on the market.

Sales of British wool have also performed well in recent years, as demand for British tweed and other “rough style” country cloth has risen among foreigners. The UK wool industry exports some 90% of its output, mainly to Japan, China, Germany and the USA.

In which of the following countries is it possible to most swiftly provide a permanent electricity connection to a newly constructed warehouse?

Bangladesh

China

South Korea

Answer: South Korea (18 days). Ease of obtaining a permanent electricity connection is a useful indicator of a country's economic development. Despite rapid growth in recent decades many emerging economies lag on this and other competitiveness indicators. It takes 143 days to obtain an electricity connection in China. The longest time to obtain an electricity connection is 517 days in the Chittagong area of Bangladesh.

Statutory parental leave packages vary widely among OECD nations. Some offer long leave periods on a fraction of the full pay; others offer little leave at full pay. One measure that allows comparison of different regimes is the length of the leave that would be covered if it were paid at 100% of the average worker’s salary. Which of the following countries provides the longest full-pay equivalent leaves to new parents?

Estonia

France

Answer: Estonia (170 days). On this metric, the most generous countries are in central and eastern Europe. Governments there are trying to counter shrinking populations by offering generous incentives to couples to have children. The US is the only OECD country which offers no national-level paid maternity leave.

What proportion of UK adults check their mobile phones in the middle of night?

One in three

One in ten

One in seven

Answer: One in three. Fomo - or the fear of missing out - leaves many UK adults in the grip of an addiction to their devices, according to Deloitte’s latest Global Mobile Consumer Survey. One in three UK adults - and half of 18-24 year olds - said they checked their phones in the middle of the night, with instant messaging and social media the most popular activities.

PS – last week’s briefing mentioned the UK’s Austin Allegro as an example of a notoriously unreliable British-made car of the 1970s. The reference prompted a number of readers to get in touch with their own memories of the car that was dubbed the “All aggro”. One colleague was the proud owner of 1978 black Vanden Plas 1500; “the deluxe Allegro” in his words. He described how on collecting the brand new car from the garage the hub caps flew off as he set off down the road. Things got worse. An AA man had to dismantle the carburettor, finding a flake of dry paint which was intermittently blocking the flow of fuel. “A week later only first gear was accessible” and “The resonant frequency of the body triggered tremendous vibrations at 70 mph producing a deafening drumming at precisely the normal cruising speed.”

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