Clemson Macroeconomics 2120 Final Exam
Questions With Complete Answers
Adam Smith's metaphor of the "invisible hand" can lead to benefits to society
when... - ANSWER institutions align the private interest with the social interest
When people choose to recycle and buy appliances that conserve on energy,
they are acting in ______ & _______. - ANSWER the social interest, their self-
interest
In an effort to clean air, many communities impose restrictions on the burning of
garbage. This policy causes more garbage to be buried underground,
potentially increasing groundwater contamination. What concept does this
example represent? - ANSWER Trade-Offs
The opportunity cost of receiving a free ticked to the NCAA championship game
with a face-value of $450 and attending the game is: - ANSWER there resale
value of the lost market value of selling the ticket and the time to go
What are the institutions that help foster the appropriate incentives for
economic growth? - ANSWER a dependable legal system, property rights, &
competitive & open markets
Gross Domestic Product (GDP) is best defined as the _____ value of all _____
goods and services that are produced _________. - ANSWER market, final, within
a country in 1 year
what data is used to calculate GDP? - ANSWER both quantities and prices of
goods
If a country's GDP per capita rises, this means that...
i. the country has fewer poorer people
ii. some people in the country have more wealth
iii. the country's standard of living is rising - ANSWER ii & iii
It is often said that _____ is the "main driver" the economy because its share of
GDP is larger than any of the other expenditure components. - ANSWER
consumption
The most volatile component of GDP is.... - ANSWER investment
Private spending on tools, plant, and equipment that are used to produce future
output is called... - ANSWER investment
, the factor income approach to calculating GDP can be summarized as the
summation of .... - ANSWER wages, interest, rent, & profit
Sydney buys a used car form Lemon Drop Used Cars in 2015 for $3,000. Francis,
a salesperson at Lemon Drop, receives $200 in commission for selling the car to
Sydney. How much does this transaction contribute to 2015 GDP? - ANSWER
$200
Last month Trevor purchased $177 of Swedish Fish from an online retailer in
Sweden. How does this transaction contribute to GDP in 2016? - ANSWER
Consumption increases by $177 and net exports fall $177
Birmingham Steel sells to Winston Golf Club Manufacturers for $300,000.
Winston sells its golf clubs to Academy Sports for $1,000,000. Academy Sports
sells Winston golf clubs for $1,500,000. How much is added to GDP? - ANSWER
$1,500,000
If you want to compare real GDP in 2010 and 2015, what prices can you use...
i. 2010 prices for GDP in both years
ii. 2015 prices for GDP in both years
iii. 2007 prices for GDP in 2010 and 2015 - ANSWER i, ii, & iii
Why is Nigeria considered to be a growth disaster in spite of the fact that it has
large deposits of oil? - ANSWER the occurrence of civil war, rulers who were
dictators and spent the wealth on arms purchases, & corruption that siphoned
away oil wealth into secret Swiss bank accounts.
The growth rate of GDP is...
a. GDP adjusted for changes in the inflation rate
b. GDP adjusted changes in the price level
c. GDP adjusted for changes in population growth
d. none of these are correct - ANSWER D.
(current year's GDP - Last year's GDP) / Last year's GDP
In the course, we use _____ as a proxy for a country's standard of living. -
ANSWER real GDP per capita
Consider an industrialized country where the growth rate of real GDP is -1% per
year. However, the growth rate of real GDP per capita is positive. What is the
most likely reason this is occurring? - ANSWER the country's population is
growing slower than the growth of nominal GDP
Questions With Complete Answers
Adam Smith's metaphor of the "invisible hand" can lead to benefits to society
when... - ANSWER institutions align the private interest with the social interest
When people choose to recycle and buy appliances that conserve on energy,
they are acting in ______ & _______. - ANSWER the social interest, their self-
interest
In an effort to clean air, many communities impose restrictions on the burning of
garbage. This policy causes more garbage to be buried underground,
potentially increasing groundwater contamination. What concept does this
example represent? - ANSWER Trade-Offs
The opportunity cost of receiving a free ticked to the NCAA championship game
with a face-value of $450 and attending the game is: - ANSWER there resale
value of the lost market value of selling the ticket and the time to go
What are the institutions that help foster the appropriate incentives for
economic growth? - ANSWER a dependable legal system, property rights, &
competitive & open markets
Gross Domestic Product (GDP) is best defined as the _____ value of all _____
goods and services that are produced _________. - ANSWER market, final, within
a country in 1 year
what data is used to calculate GDP? - ANSWER both quantities and prices of
goods
If a country's GDP per capita rises, this means that...
i. the country has fewer poorer people
ii. some people in the country have more wealth
iii. the country's standard of living is rising - ANSWER ii & iii
It is often said that _____ is the "main driver" the economy because its share of
GDP is larger than any of the other expenditure components. - ANSWER
consumption
The most volatile component of GDP is.... - ANSWER investment
Private spending on tools, plant, and equipment that are used to produce future
output is called... - ANSWER investment
, the factor income approach to calculating GDP can be summarized as the
summation of .... - ANSWER wages, interest, rent, & profit
Sydney buys a used car form Lemon Drop Used Cars in 2015 for $3,000. Francis,
a salesperson at Lemon Drop, receives $200 in commission for selling the car to
Sydney. How much does this transaction contribute to 2015 GDP? - ANSWER
$200
Last month Trevor purchased $177 of Swedish Fish from an online retailer in
Sweden. How does this transaction contribute to GDP in 2016? - ANSWER
Consumption increases by $177 and net exports fall $177
Birmingham Steel sells to Winston Golf Club Manufacturers for $300,000.
Winston sells its golf clubs to Academy Sports for $1,000,000. Academy Sports
sells Winston golf clubs for $1,500,000. How much is added to GDP? - ANSWER
$1,500,000
If you want to compare real GDP in 2010 and 2015, what prices can you use...
i. 2010 prices for GDP in both years
ii. 2015 prices for GDP in both years
iii. 2007 prices for GDP in 2010 and 2015 - ANSWER i, ii, & iii
Why is Nigeria considered to be a growth disaster in spite of the fact that it has
large deposits of oil? - ANSWER the occurrence of civil war, rulers who were
dictators and spent the wealth on arms purchases, & corruption that siphoned
away oil wealth into secret Swiss bank accounts.
The growth rate of GDP is...
a. GDP adjusted for changes in the inflation rate
b. GDP adjusted changes in the price level
c. GDP adjusted for changes in population growth
d. none of these are correct - ANSWER D.
(current year's GDP - Last year's GDP) / Last year's GDP
In the course, we use _____ as a proxy for a country's standard of living. -
ANSWER real GDP per capita
Consider an industrialized country where the growth rate of real GDP is -1% per
year. However, the growth rate of real GDP per capita is positive. What is the
most likely reason this is occurring? - ANSWER the country's population is
growing slower than the growth of nominal GDP
