NEW YORK -- A major new test has revealed that most Americans are abysmally ignorant of basic economic and financial facts of modern life, and unlikely to get much smarter soon.


A survey of 1,000 randomly selected Americans conducted by Luntz Research Cos. shows four out of every five got flunking grades of below 60 percent on a 10-question quiz on what Merrill Lynch & Co. Inc., the survey sponsor, calls "financial literacy.''


The college professors who wrote and analyzed the test were not pleased.


"Most Americans simply don't possess an understanding of even the most basic financial and economic concepts,'' said Frank I. Luntz, adjunct assistant professor at the University of Pennsylvania and president of Luntz Research. B. Douglas Bernheim, professor of economics at Stanford University, appeared horrified to discover that two-thirds of the test-takers "would not hazard a guess as to the level of the Dow Jones average.''


The professors and the Merrill Lynch executives who released the results suggested this ignorance of investment alternatives, inflation and mortgage rates may have something to do with Americans' failure to save adequately and buy enough insurance. Respondents said they get most of their financial advice from relatives.


"The results are shockingly low,'' said Daniel P. Tully, Merrill Lynch chairman and chief executive. "We believe that this test goes to the heart of a very important national issue -- the ability of Americans to manage the economic decisions they must make day-to-day in order to prepare effectively for the future.''


To take the one bit of good news first, 71 percent of the test takers did well computing interest, although Luntz said that may have been because there were only two choices: Would 8 percent interest compounded annually over 30 years on $1,000 give you more or less than $5,000?


It was downhill from there.


Only 33 percent could name Alan Greenspan as chairman of the Federal Reserve Board.


Even when the test graders created canyon-like tolerances for right answers, the results were embarrassing.


Only 11 percent got the U.S. federal deficit ($254 billion) right, and that was with credit for any answer between $100 billion and $400 billion. Only 13 percent could place the highest Social Security benefit for a two-person household between the acceptable range of $15,000 to $30,000 a year. Only 14 percent gave the Dow Jones industrial average (between 3,700 and 3,800 when the survey was taken) correctly even with credit for any answer between 3,600 and 3,900.


None of the 1,000 respondents got all 10 questions right. Two percent missed one, 3 percent missed two and 4 percent missed three. Luntz missed the Social Security question. Of eight reporters who bravely took the test, three flunked.


"It's a little bit scary,'' Luntz said.