Summer quiz

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31 July 2023

Summer quiz

Our summer quiz offers an eclectic test of knowledge about business, economics and finance. The answers to the ten questions and a brief explanation of the factors at work are at the end of the quiz.

 

  1. Every year the UK Office for National Statistics updates the basket of goods and services it uses to measure Consumer Price Inflation to ensure it remains representative of patterns of consumer spending. Which of these products have been added to the inflation basket this year and which have been dropped?
  1. E-bikes
  2. Security cameras
  3. Digital compact cameras
  4. Non-chart CDs and DVDs

 

  1. The Post Office Holiday Money Report compares the price of holiday essentials in 40 popular destinations for UK tourists. In which one of the following cities is a basket of eight typical tourist items, including sun cream, a meal at a restaurant, a coffee, and a bottle of beer cheapest?
  1. Sunny Beach, Bulgaria
  2. Marmaris, Turkey
  3. Cape Town, South Africa
  4. Reykjavik, Iceland

 

  1. The pandemic has had many lasting effects. Which one of the following activities has grown by 83% since 2019? All data are for the US.
  1. Mid-week trips to the golf course
  2. Proportion of shopping conducted online
  3. Proportion of paid full days working from home
  4. Durable goods purchases

 

  1. Generative AI technologies have captured the public’s imagination after the release of popular chatbots including Bard and ChatGPT. What proportion of the UK population has used Generative AI technology?
  1. 6%
  2. 11%
  3. 26%
  4. 58%

 

  1. What is the loss of output caused by granting an extra bank holiday? The options below represent a share of a single day’s GDP and relate to a survey of over 200 countries.
  1. 110%
  2. 82%
  3. 33%
  4. 20%

 

  1. Where is the cheapest place to buy a Big Mac for a traveller carrying dollars this year?
  1. Venezuela
  2. Egypt
  3. Uruguay
  4. US

 

  1. Visitors to the UK from which one of the following countries spent the most money per visit last year?
  1. Hong Kong
  2. Middle East
  3. China
  4. Sri Lanka

 

  1. What has been the best-performing stock in the UK FTSE 100 equity index so far this year? (as of 27 July)
    a. J Sainsburys plc
    b. Next plc
    c. Rolls-Royce Holdings plc
    d. BT Group plc

 

  1. Analysis by Overton, a firm that tracks the impact of research on policy making, estimates that there are 11,175 think tanks globally with 228 based in the UK. These organisations generally aim to produce research and inform and influence government policy. Which one of the following UK think tanks is most cited by British policy makers?
  1. The Resolution Foundation
  2. Joseph Rowntree Foundation
  3. Institute for Government
  4. Institute for Fiscal Studies

 

  1. This year is the tercentenary of the birth of the Scottish economist and philosopher Adam Smith. Three of the following four quotes are attributed to Adam Smith, which one of the following is not a statement made by him?
  1. People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices
    b. The old saying holds. Owe your banker £1,000 and you are at his mercy; owe him £1 million and the position is reversed
    c. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages
    d. As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce

 

Answers

  1. Every year the UK Office for National Statistics updates the basket of goods and services it uses to measure Consumer Price Inflation to ensure it remains representative of patterns of consumer spending. Which of these products have been added to the inflation basket this year and which have been dropped?
  1. E-bikes
  2. Security cameras
  3. Digital compact cameras
  4. Non-chart CDs and DVDs

Answer: a and b added, c and d dropped. E-bikes and security cameras have been added while digital compact cameras and non-chart CDs and DVDs have been removed. The sale of e-bikes has surged in recent years, helped by improved battery life and lighter bikes. Cycle maker Raleigh said it expects to sell more e-bikes than traditional bikes for the first time this year. Security cameras have joined the basket reflecting the popularity of a wide range of video doorbells. Digital compact cameras are out as spending has shifted towards smartphones with good-quality cameras. Non-chart CDs and non-film DVDs have also been dropped as consumers instead opt for streaming services.

 

  1. The Post Office Holiday Money Report compares the price of holiday essentials in 40 popular destinations for UK tourists. In which one of the following cities is a basket of eight typical tourist items, including sun cream, a meal at a restaurant, a coffee, and a bottle of beer cheapest?
  1. Sunny Beach, Bulgaria
  2. Marmaris, Turkey
  3. Cape Town, South Africa
  4. Reykjavik, Iceland

Answer: c – Cape Town, South Africa. While sterling fell in value against two-thirds of the Post Office’s top 30 bestselling currencies over the survey period (March 2022 – March 2023), the pound has surged against the Turkish lira and South African rand. Cape Town in South Africa currently offers the best value for money, knocking the previous top-ranked destination Marmaris, Turkey, into second place. In Cape Town, the basket of goods costs just one-fifth of the amount needed in Reykjavik, the most expensive destination included in the survey. Sunny Beach, Bulgaria, is the third best value destination, where you can find the cheapest filter coffee of the surveyed destinations, at £0.96.

 

  1. The pandemic has had many lasting effects. Which one of the following activities has grown by 83% since 2019? All data are for the US.
  1. Mid-week trips to the golf course
  2. Proportion of shopping conducted online
  3. Proportion of paid full days working from home
  4. Durable goods purchases

Answer: a – Mid-week trips to the golf course. Academics Alex Finan and Nick Bloom of Stanford University estimate that mid-week trips to US golf courses have increased by 83% since 2019. Trips on a Wednesday at 4pm have almost quadrupled. Hybrid and remote work arrangements have given workers greater flexibility to take time off during the week. Online shopping boomed during the pandemic but fell back sharply as shops reopened. It is now close to the levels that would have been expected had pre-pandemic growth rates persisted over the last three and a half years. The proportion of paid full days working from home in the US has risen from 5% before the pandemic to 28%, almost a six-fold rise. Purchases of durable goods were 33% higher in May compared with the same month in 2019 reflecting the jump in durable spending during the pandemic.
 

  1. Generative AI technologies have captured the public’s imagination after the release of popular chatbots including Bard and ChatGPT. What proportion of the UK population has used Generative AI technology?
  1. 6%
  2. 11%
  3. 26%
  4. 58%

Answer: c – 26%. According to a recent Deloitte survey of UK consumers, more than a quarter (26%) have used Generative AI tools and just over half, 52%, have heard of this technology. Given that ChatGPT was only launched in November 2022 the pace of adoption has been impressive. But turning these technologies into everyday tools, on par with search engines, will be a harder task. Among those who have used the technology, only 43% believe that Generative AI always produces factually accurate responses and just 38% believe they are unbiased. The findings are from Deloitte’s 2023 Digital Consumer Trends research, based on a survey of 4,150 UK adults aged 16-75.

 

  1. What is the loss of output caused by granting an extra bank holiday? The options below represent a share of a single day’s GDP and relate to a survey of over 200 countries.
  1. 110%
  2. 82%
  3. 33%
  4. 20%

Answer:  d – 20%. A recent paper by economists Lucas Rosso and Rodrigo Wagner (2022) estimates that an extra bank holiday reduces GDP by an average of about 20% of one day’s GDP. This seems like a good exchange – an extra day’s holiday for only a 20% reduction in pay. A significant share of lost production is offset by continued output in sectors including agriculture, a boost to consumption and hospitality on the bank holiday and a catch-up in activity on other working days. There are other benefits from bank holidays, including reduced work-related accidents and gains in happiness. The UK is at the low end of the European scale on bank holidays. England has eight, compared to an average of almost 13 days in the EU.

 

  1. Where is the cheapest place to buy a Big Mac for a traveller carrying dollars this year?
  1. Venezuela
  2. Egypt
  3. Uruguay
  4. US

Answer:  a – Venezuela. The Economist’s Big Mac Index aims to capture the purchasing power of different currencies by comparing the price of a Big Mac across different countries. According to the index, a Big Mac costs just $1.76 in Venezuela compared to $5.15 in the US. A prolonged period of hyperinflation has resulted in a significant devaluation of the Venezuelan bolivar, reducing the price of a Big Mac in dollar terms from $8.35 in 2021. Similarly, the devalued Egyptian pound makes it the second cheapest place to buy a Big Mac, where the burger only costs $1.84. Switzerland is the most expensive place to buy the burger, followed by Uruguay. A rally in the value of the Uruguayan peso against the dollar means that it costs $6.85 to buy a Big Mac in Uruguay.

 

  1. Visitors to the UK from which one of the following countries spent the most money per visit last year?
  1. Hong Kong
  2. Middle East
  3. China
  4. Sri Lanka

Answer: c – China. According to the UK Office for National Statistics, visitors from China spent an average of £2,975 per trip in 2022. Visitors from the Middle East and Hong Kong spent an average of £2,913 and £2,095, respectively. Travellers from Sri Lanka spent over £2,000 on average but the number of visits was much lower. Total visits to the UK increased in 2022 to 31.2m, following sharply lower numbers of visitors in the preceding two years due to the pandemic, but that was still below the pre-COVID level of 40.9m. Individuals from the USA made the most visits to the UK last year, followed by France, the Republic of Ireland and Germany.

 

  1. What has been the best-performing stock in the FTSE 100 so far this year? (as of 27 July)

a. J Sainsburys plc
b. Next plc
c. Rolls-Royce Holdings plc
d. BT Group plc

Answer: c – Rolls-Royce Holdings plc. Had you invested in Rolls Royce at the beginning of the year you would have nearly doubled your money with the stock returning 98%. The aero-engine manufacturer has benefitted from the rebound in international travel with its shares jumping 24% last week as it upgraded its profit forecasts. The other FTSE 100 companies listed have posted double-digit rises in their stock price so far this year, outperforming the FTSE 100 as a whole, which is up 3% YTD.

 

  1. Analysis by Overton, a firm that tracks the impact of research on policy making, estimates that there are 11,175 think tanks globally with 228 based in the UK. These organisations generally aim to produce research and inform and influence government policy. Which of the following UK think tanks is most cited by British policy makers?
  1. The Resolution Foundation
  2. Joseph Rowntree Foundation
  3. Institute for Government
  4. Institute for Fiscal Studies

Answer: d – The Institute for Fiscal Studies. Often referred to as the IFS, the Institute for Fiscal Studies is the most cited think tank in UK policy documents, according to Overton. The IFS specialises in taxation and public policy and their verdict on UK chancellors’ plans for spending and taxation can make or break their credibility.

 

  1. This year is the tercentenary of the birth of the celebrated Scottish economist and philosopher Adam Smith. Smith’s work revolutionised thinking about the economy. He, more than any other individual, laid the foundation of modern economics. Three of the following four quotes are attributed to Adam Smith, which one of the following is not a statement made by him?
  1. People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices
  2. The old saying holds. Owe your banker £1,000 and you are at his mercy; owe him £1 million and the position is reversed
  3. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages
  4. As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed and demand a rent even for its natural produce

Answer: b – The quote on the troubled bank manager is attributed to the similarly influential economist John Maynard Keynes, who was born 160 years after Adam Smith.


For the latest charts and data on health and economics, visit our Economics Monitor:
https://www2.deloitte.com/uk/en/pages/finance/articles/covid-19-economics-monitor.html

OUR REVIEW OF LAST WEEK’S NEWS
The UK FTSE 100 equity index ended the week up 0.4% at 7,694. 

Economics

  • The US Fed raised its benchmark interest rate target by 0.25 percentage points to 5.25%–5.5%, its highest level in 22 years, and announced that it was no longer forecasting a US recession
  • The ECB also raised its benchmark interest rate by 0.25 percentage points, matching the all-time high of 3.75% reached in 2001 and hinted that this rise may be its last
  • The Bank of England announced that former Fed chair Ben Bernanke will lead a review of its forecasting following criticism for failing to forecast the significant rise in inflation seen over the past two years
  • The Fed’s preferred inflation measure, the core personal consumption expenditure index, fell to 4.1% in the 12 months to June, its lowest level in two years
  • The US economy grew by 0.6% between the first and the second quarters, a stronger than expected outcome
  • Together with a slight rise in US consumer spending in June, higher consumer confidence in July and slower than expected wage growth in the second quarter, this strengthens the case for a soft landing – that the US will bring inflation under control without a deep recession
  • Early estimates of activity in July from surveys of purchasing managers show a contract in activity in the euro area and a deceleration of growth in the US and UK, all driven by falling activity in their manufacturing sectors
  • A fall in French and German inflation in July has raised hopes of a fall in the headline inflation figure for the euro area when it is published this morning, reducing the pressure on the ECB to further raise interest rates
  • The German economy is estimated to have stagnated in the second quarter, posting no growth, following two quarters of declining output
  • The Bank of Japan announced an easing of its controls on the market for Japanese government bonds, leading to their yields hitting at nine-year high
  • The Office for National Statistics reported that the proportion of people of working age reporting a long-term health condition has risen to 36% in the first quarter, up from 31% in the same period in 2019
  • The EU’s Copernicus climate monitoring body said that July is set to be the hottest month ever recorded, with temperatures at times 1.5°C above pre-industrial averages
  • Amid the record heatwave, wildfires around the Mediterranean have killed over 40 people and forced thousands of locals and holidaymakers to flee
  • A study by researchers at the University of Copenhagen predicted that ocean currents in the North Atlantic are likely to collapse sometime between 2025 and 2095, resulting in a range of climate impacts including cooling in the Northern Hemisphere, heating in the tropics and stormier winters combined with drier summers in Europe. Other scientists have previously said that they expect that this ‘tipping point’ is further away

Business

  • IAG, owner of British Airways, and Air France-KLM both announced record profits last week as robust demand for flights has met an industry-wide shortage of planes
  • The EU has opened an investigation into whether Spanish regulations that advantage traditional taxi operators at the expense of app-based private hire services are compliant with European law, the FT reports
  • Computer manufacturer HP announced plans to move production from China to Thailand and Mexico due to US-China tensions
  • UK supermarket Co-op warned that crime was “out-of-control” with nearly 1,000 incidents at its shops every day in the first half of this year
  • Credit Suisse, which has itself since failed, was fined $388m by UK and US regulators for failures over the collapse of Archegos Capital in 2021
  • US officials are examining the planned takeover of US-based Fortress Investment Group by a UAE sovereign wealth fund amid US concerns over ties between the UAE and China, the FT reports
  • The US Federal Deposit Insurance Corporation accused US banks of underreporting how many uninsured deposits they held amid plans to charge a levy on uninsured deposits to cover the costs of rectifying recent bank failures

Global and political developments

  • The UK’s High Court ruled that Labour mayor Sadiq Khan’s decision to expand London’s Ultra Low Emission Zone was lawful following a legal challenge by five Conservative-led councils. The zone will expand on 29 August
  • The chief executives of the banks NatWest and Coutts resigned following controversy over an inaccurate report that prominent Brexit supporter Nigel Farage’s account was closed for purely commercial reasons
  • Former US president Donald Trump was charged with obstruction and wilful retention of national defence information, adding to existing charges
  • Russia is to raise its maximum conscription age from 27 to 30, increasing its pool of available recruits as the war in Ukraine continues
  • Sweden’s intelligence service warned that country has become a “priority” target for terrorists following a number of Quran-burning protests
  • General Abdourahmane Tchiani declared himself leader following a military coup in Niger, to the condemnation of the international community

And finally… a cinema in India mistakenly played the film Oppenheimer with the subtitles to Barbie, mashing up two rather different films – Come on Barbie, let’s go part the atom

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