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 country has the highest house prices relative to incomes?

1. Canada 
2. South Korea 
3. United Kingdom
4. United States  

2. Which is the most liveable city according to the Economist Intelligence Unit (EIU)?

1. London, United Kingdom 
2. Edinburgh, United Kingdom 
3. Stockholm, Sweden
4. Vienna, Austria

3. Which UK supermarket’s mince pies topped this year’s Which? magazine blind taste test?

1. Co-op 
2. Marks & Spencer 
3. Tesco
4. Waitrose

4. In the 2021 Budget the UK government froze the personal tax allowance, higher rate tax threshold and the National Insurance upper and lower earnings limits. These thresholds and limits are normally raised in line with inflation. The freeze will last until 2029, taking a significantly larger proportion of peoples’ incomes into tax and into higher rate bands. In 2029, the final year of the freeze, how much extra revenue will the government raise as a result of not having raised allowances and thresholds? (Hint: for comparison, a 1p increase in the basic rate of income would generate about £7bn.)

1. £7.5bn 
2. £13.5bn 
3. £22.1bn
4. £44.6bn 

5. UK inflation reached a 40-year high of 11.1% in October 2022. Since then inflation has fallen, with prices rising by 4.6% in the 12 months to October 2023. Which of the following goods or services has seen the sharpest price increase in the last 12 months?

1. Sugar
2. Natural gas 
3. Motor vehicle insurance 
4. Olive Oil

6. What was the biggest-grossing film worldwide in 2023?

1. Barbie 
2. Big George Foreman
3. The Super Mario Bros. Movie 
4. Oppenheimer 

7. Between 1 January and 30 November 2023 which one of the following currencies saw the largest decline against the US dollar?

1. Argentine peso 
2. Lebanese pound
3. Syrian pound 
4. Zimbabwean dollar 

8. Between 1 January and 30 November 2023 what was the best performing stock in the UK FTSE 100 equity index?

1. Burberry, luxury clothing and accessories
2. Marks and Spencer, high-street retailer
3. Rolls-Royce, aerospace
4. BP, energy

9. According to the Common Sense Institute, an economic research body in Colorado, how much additional consumer spending could Taylor Swift’s latest US tour generate?

1. $490m 
2. $1.6bn
3. $2.2bn 
4. $4.6bn    

10. On the 30  November 2023, ChatGPT reached its first birthday. How long did it take for ChatGPT to reach 100m users? (Hint: It took 2.5 years for Instagram to reach 100m users.)

1. 2 months 
2. 3 months 
3. 6 months 
4. 9 months 

11. Governments in many countries had to borrow heavily to finance extra spending during the pandemic. The pandemic is past, but the International Monetary Fund estimates that 158 out of 190 countries will run government deficits this year. Which high-income country is predicted to be the biggest borrower this year, measured as a share of GDP?

1. Norway 
2. Qatar
3. Japan
4. United States    

12. People in which country spend the most on Christmas as a share of monthly income?

1. France
2. Romania
3. United Kingdom  
4. Italy

Answers

1. Which country has the highest house prices relative to incomes?

1. Canada 
2. South Korea 
3. United Kingdom
4. United States 

Answer: A – Canada. Canadian house prices rank as being more overvalued relative to disposable income than in any other OECD country. Other anglophone countries tend to rank high on the list, with the UK in seventh place and the US in eleventh place. Housing is cheapest in South Korea, which ranks at the bottom of the OECD valuation rankings.

2. Which is the most liveable city according to the Economist Intelligence Unit (EIU)?

1. London, United Kingdom
2. Edinburgh, United Kingdom
3. Stockholm, Sweden
4. Vienna, Austria

Answer: D – Vienna, Austria.  The Austrian capital topped the 2023 ranking, with Copenhagen and Melbourne in second and third places, respectively. The EIU commended Vienna’s “winning combination of stability, good culture and entertainment, reliable infrastructure, and exemplary education and health services”. The most highly rated cities tend to be in Western Europe, North America, Asia and Australasia. Damascus remains, as it has been for over a decade, as the least liveable city according to the survey.

3. Which UK supermarket’s mince pies topped this year’s Which? magazine blind taste test?

1. Co-op
2. Marks & Spencer
3. Tesco
4. Waitrose  

Answer: A – Co-op. Co-op came top out of ten premium own-label mince pies in a blind tasting covering aroma, appearance, texture and taste. Co-op Irresistible Luxury Mince Pies cost £2.75 for six, less than lower-rated pies, but more expensive than options including Waitrose No.1 Brown Butter Mince Pies at £4 for six. Which? reports that on average mince pies cost 10.5% more than 12 months ago, a faster rate of inflation than the latest all-items rate of 4.6%. 

4. In the 2021 Budget the UK government froze the personal tax allowance, higher rate tax threshold and the National Insurance upper and lower earnings limits. These thresholds and limits are normally raised in line with inflation. The freeze will last until 2029, taking a significantly larger proportion of peoples’ incomes into tax and into higher rate bands. In 2029, the final year of the freeze, how much extra revenue will the government raise as a result of not having raised allowances and thresholds? (Hint: for comparison, a 1p increase in the basic rate of income would generate about £7bn.)

1. £7.5bn
2. £13.5bn
3. £22.1bn
4. £44.6bn

Answer: D – £44.6bn, equivalent to raising the basic rate of income tax from 20p to 26p. As inflation increases the cost of living and wages, nominal pay rises. Freezing income tax thresholds means that people pay more in tax and more people enter higher tax brackets. This offers a far less obvious way of raising taxes than increased tax rates. The Office for Budget Responsibility expects 4m more people to start paying income tax as a result of the freeze, 3m more to move to the 40p rate and 400,000 more to pay the 45p rate.

5. UK inflation reached a 40-year high of 11.1% in October 2022. Since then inflation has fallen, with prices rising by 4.6% in the 12 months to October 2023. Which of the following goods or services has seen the sharpest price increase in the last 12 months?

1. Sugar
2. Natural gas
3. Motor vehicle insurance
4. Olive oil

Answer: C – Motor vehicle insurance. The price of vehicle insurance has risen by 51.2% over the last 12 months with rising material, labour and energy costs contributing to a sharp rise in repair costs and insurance premiums. The price of olive oil rose 50.2% due to extreme weather hitting harvests in Italy and Spain. Weather was also to blame for a 49.6% increase in sugar prices, due to unusually dry conditions in India and Thailand. After reaching record levels in 2022 on Russia’s invasion of Ukraine, natural gas prices have fallen 31.6% over the last 12 months.

6. What was the biggest-grossing film worldwide in 2023?

1. Barbie
2. Big George Foreman
3. The Super Mario Bros. Movie
4. Oppenheimer   

Answer: A – Barbie generated $1.44bn at the box office, just ahead of The Super Mario Bros. Movie at $1.36bn. Oppenheimer ranked third in this year’s box office with takings of $950m. The film Big George Foreman was the biggest loss-making film of 2023, generating sales of $5.7m against a cost of $32m.

7. Between 1 January and 30 November 2023 which one of the following currencies saw the largest decline against the US dollar?

1. Argentine peso
2. Lebanese pound
3. Syrian pound
4. Zimbabwean dollar

Answer: B – Lebanese pound. The Lebanese pound was devalued in February by 90%. According to the World Bank, Lebanon’s situation ranks among the “most severe crises…globally since the mid-nineteenth century” and is the product of three decades of reckless fiscal and monetary policy. The crisis has seen GDP contract by 40%, pushed inflation into triple-digits and drained two-thirds of the central bank's foreign currency reserves. The Argentine peso has fallen 50% against the US dollar as its economy grapples with high inflation and a shrinking economy. Syria was readmitted to the Arab League in April, but its economy has been devastated by war, instability in Lebanon, sanctions and high inflation. Its currency has fallen by 80% against the dollar. Zimbabwe’s economy has been in turmoil for over 20 years with rampant inflation leading to an 88% devaluation against the dollar so far this year. The rates quoted here are all official rates. On the black market, all of these currencies trade at far lower levels. The current black market rate for the Lebanese pound, for instance, is almost 90,000 to the US dollar, six times the official rate.

8. Between 1 January and 30 November 2023 what was the best performing stock in the UK FTSE 100 equity index?

1. Burberry, luxury clothing and accessories
2. Marks and Spencer, high-street retailer
3. Rolls-Royce, aerospace
4. BP, energy

 Answer: C – Rolls-Royce whose shares have risen 185% this year. Rolls-Royce revenues have been boosted by rising demand for civil air travel and for military aircraft. Marks & Spencer had a bumper year with its share price increasing over 100%. After large gains in 2022 oil and gas company shares have stabilised with BP’s share price up 1% year-to-date. Slowing demand for luxury goods, especially in China, has affected luxury goods retailers with Burberry’s share price having fallen 25% year-to-date.

9. According to the Common Sense Institute, an economic research body in Colorado, how much additional consumer spending could Taylor Swift’s latest US tour generate?

1. $490m
2. $1.6bn
3. $2.2bn
4. $4.6bn    

Answer: D – $4.6bn. Taylor Swift’s The Eras Tour has helped generate significant revenues for host cities. The tour's opening night in Glendale, Arizona brought in more revenue for local businesses than the Super Bowl, held at the same venue earlier this year. The Federal Reserve Bank of Philadelphia noted in its May Beige Book that Swift's tour stop in Philadelphia had been a boon for the city's tourism industry. Booking.com noted that hotel prices more than tripled in anticipation of the tour in some cities.

10. On the 30  November 2023, ChatGPT reached its first birthday. How long did it take for ChatGPT to reach 100m users? (Hint: It took 2.5 years for Instagram to reach 100m users.)

1. 2 months
2. 3 months
3. 6 months
4. 9 months

Answer: A – 2 months. It took TikTok 9 months to reach 100m users, WhatsApp 3.5 years and Netflix 10 years. As of November this year, it is estimated that ChatGPT had over 180m users worldwide.

11. Governments in many countries had to borrow heavily to finance extra spending during the pandemic. The pandemic is past, but the International Monetary Fund estimates that 158 out of 190 countries will run government deficits this year. Which high-income country is predicted to be the biggest borrower this year, measured as a share of GDP?

1. Norway
2. Qatar
3. Japan
4. United States

Answer: D – United States. The US government is set to borrow 8.2% of its GDP this year.  Higher welfare and debt servicing costs, increased military and infrastructure spending and the effect of Trump-era tax cuts have contributed to the US deficit. Japan’s borrowing is forecast to be equivalent to 5.6% of its GDP in 2023. Norway and Qatar have benefitted from high energy prices and are forecast to repay government debt, rather than borrow this year.

12. People in which country spend the most on Christmas as a share of monthly income?

1. France 
2. Romania
3. United Kingdom
4. Italy

Answer: B – Romania. According to research by WorldAtlas, Romanians are the most generous when it comes to Christmas, spending on average 32% of their monthly income on the festive season. In third place, the UK spends 15%. Italy ranks as the fifth most generous nation, spending 12% of monthly income on Christmas. France ranks eighth with 11%.