ECON 2120 CLEMSON EXAM 2 QUESTIONS WELL ANSWERED LATEST UPDATE 2026

ECON 2120 CLEMSON EXAM 2 QUESTIONS WELL ANSWERED LATEST UPDATE 2026 A __________ ___________ pools money from many customers and "actively" or "passively" invest that money into many firms or stock market indices, in exchange for a management fee - Answers mutual fund in a typical year passive investing in the S&P 500 beats about ___% of all mutual funds - Answers 60 Warren Buffet can be considered a stock guru, but we cannot rule out the fact that he just might be ________. After all, low probability events are not impossible. If 1000 investors flipped a coin to predict whether the stock market will go up or down in the following year, ___ of those investors would be lauded as experts, at the end of 5 years. - Answers lucky; 31 investing in a broad stock market index such as ones that mimic the S&P 500 would be considered ____ investing - Answers passive investing in select stocks that you or a fund manager believes will yield a high return (i.e. attempting to engage in arbitrage), is considered _______ investing - Answers active one reason that the market is hard to beat is that the market prices reflect all available __________ - Answers information According to the efficient markets hypothesis, prices of traded assets reflect all _______ ________ _______ - Answers publicly available information if you do have information that could yield a return in the stock market, you would need to act within a matter of _____ - Answers minutes one reason that beating the market is hard is the fact that information about a stock price rising (or falling) is available to both ______ and _____ of that stock - Answers buyers; sellers looking for deep, systematic, regular patterns in stock and asset prices - Answers technical analysis picking a large set of stocks or _______ your portfolio is considered a wise investment strategy - Answers diversifying deciding to buy stocks and not sell them for a long time, despite what prices could be doing in the short run - Answers buy and hold the Dow Jones industrial average, NASDAQ, S&P 500.... these are _____ ______ - Answers stock indices the annual rate of return in the S&P 500 is roughly 10%. if you invested $20,000 in SPDR S&P 500 (an exchange traded fund designed to track the S&P 500), in 35 years you will have $_______ - Answers $640,000 if I wanted to have a higher rate of return on my investments, I would have to invest in ______ assets. there is no such thing as a free lunch. - Answers riskier stock markets ______ successful entrepreneurs, encouraging people to start companies - Answers reward the stock price is a ______ of the value of a firm - Answers signal the stock market offers a way to __________ control of a company from less competent people to more competent people - Answers transfer when a stock price rises faster than it can be accounted for - Answers speculative bubble greater ________ when assessing the value of companies can be a partial solution to speculative bubbles - Answers transparency if your broker calls you to sell on a stock purchase, you should understand the _______ of your broker. there are probably high fees associated with the transaction - Answers incentives expected returns for assets adjust for the ______ of the investment - Answers risk investments that have a "fun" or practical aspect to them such as art or a home, typically have ______ financial return - Answers lower a house should be a good place to _____ not invest - Answers live From 1997 to 2006 housing prices _________. from 2006 to 2011 housing prices ______. since 2011 housing prices have been ________. - Answers increased, decreased, increasing if I am a stay at home parent not looking for work, I am not part of the _______ - Answers labor force the unemployment rate is the number of unemployed individuals divided by the ________, which is the number of _______ individuals + number of ______ individuals - Answers labor force, employed + unemployed if the adult population is 1,000,000 number of employed individuals is 500,000 and the number of unemployed individuals is 50,000 my unemployment rate is ______% - Answers 10% if the working age adult population is 1,000,000 individuals and the number of employed individuals is 500,000 and the number of unemployed individuals is 50,000 the labor force participation rate is _____% - Answers 55% the unemployment rate does not account for ______ workers and _______ - Answers discouraged; underemployment if I find a job by putting my resume on LinkedIn , allowing potential employers to see my skills and work experience, I am using technology to overcome this type of unemployment - Answers frictional unemployment the shortest term unemployment that is caused by imperfect information, causing difficulties of matching an employee to an employer - Answers frictional unemployment persistent long term unemployment caused by long lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs - Answers structural unemplyment in the early 1800s textile artisans had disdain for mechanical looms. their fear was that technological innovation would cause ______ unemployment. Joseph Schumpeter would call this _________ ________ - Answers structural; creative destruction unemployment correlated with the business cycle - Answers cyclical unemployment in Europe we see more generous unemployment benefits, relative to the US. the cost of this is more ________ ________ - Answers structural unemployment employment protection laws and generous unemployment benefits serve to benefit those who are __________, with the unseen cost of hurting the ________ - Answers employed; unemployed unemployment benefits, employment protection laws, minimum wage requirements, and union contracts _________ the risk of hiring new workers - Answers increase the unemployment at will doctrine and active labor market policies make labor markets more ________. in other words, unemployed individuals will have an easier time finding another job - Answers dynamic long - term unemployment tends to _______ as the rigidity of employment regulation increases - Answers increase labor force participation rate - Answers (unemployed + employed) / adult population three factors that determine the labor force participation rate - Answers life cycle effects; demographics; incentives as the baby boomer generation reaches retirement, the labor force participation rate will - Answers fall policies that do not allow retirement age individuals to work and receive their pension payments ______ the incentive to participate in the labor force - Answers reduces policies that push older individuals into retirement imposes a cost on _______ workers. they now have to pay _______ taxes, since older individuals are not contributing to the GDP - Answers younger; higher a policy that encourages young individuals to remain full time students ________ labor force participation - Answers reduces increasing the minimum wage ________ quantity demanded for labor, while it ________ quantity supplied - Answers decreases; increases job retraining, job search assistance, work tests, and early employment bonuses are all examples of _________ ________ ________ ________ - Answers active labor market policies when real GDP growth is positive we can expect the unemployment rate to __________ - Answers fall structural + frictional - Answers natural rate of unemployment an increase in the average price level - Answers inflation Given: - P2000 is the price index in the year 2000 - P1999 is the price index in the year 1999 the inflation rate from is measured as - Answers ((P2000-P1999)/P1999 ) x 100 measures the average price for a basket of goods and services bought by a typical American consumer - Answers CPI - consumer price index the improving quality of some goods and services provides a challenge to the BLS when they measure CPI. For example, $1000 in today's money can buy you a computer that is many times more powerful than a computer purchased with $1000 20 years ago. This suggests that the true price of computers has __________ - Answers fallen