ECON 103 COMPREHENSIVE EXAM UPDATED
QUESTIONS AND ANSWERS SURE A+
✔✔Entrepreneurship - ✔✔The ability and willingness to combine land, labor, and capital
to create and manage a business.
✔✔The Production Possibilities Frontier - ✔✔A curve that illustrates the maximum
feasible amount of two goods that can be produced with available resources and
technology.
✔✔4 Concepts Illustrated by the PPF Curve - ✔✔1. Scarcity, 2. Trade-offs, 3.
Opportunity costs, 4. Efficiency.
✔✔4 PPF Curve Assumptions - ✔✔1. Resources are fixed, 2. Technology is constant,
3. All resources are fully employed, 4. Production is efficient.
✔✔Productive Efficiency - ✔✔A situation in which the economy cannot produce more of
one good without producing less of another good.
✔✔Law of Increasing Opportunity Costs - ✔✔As production of one good increases, the
opportunity cost of producing an additional unit rises.
,✔✔Specialization - ✔✔The process by which individuals or groups focus on a limited
scope of tasks to gain greater efficiency and productivity.
✔✔Gains from Specialization - ✔✔The benefits that arise when individuals or entities
concentrate on producing goods or services in which they have a comparative
advantage, leading to increased overall output and efficiency.
✔✔Absolute Advantage - ✔✔The ability of an individual, company, or country to
produce more of a good or service with the same amount of resources than another
entity.
✔✔Comparative Advantage - ✔✔The ability of an individual, company, or country to
produce a good or service at a lower opportunity cost than another entity, which
encourages trade and specialization.
✔✔Imports - ✔✔Goods and services that are brought into a country from abroad for
sale.
✔✔Exports - ✔✔Goods and services that are produced in one country and sold to
another country.
✔✔What are the 3 Goals of Macroeconomics? - ✔✔The three goals of macroeconomics
are economic growth, full employment, and price stability.
✔✔What is inflation? - ✔✔Inflation is the rate at which the general level of prices for
goods and services rises, eroding purchasing power.
✔✔What is deflation? - ✔✔Deflation is the decrease in the general price level of goods
and services, often associated with reduced consumer spending.
✔✔What is the inflation rate? - ✔✔The inflation rate is the percentage change in the
price level of a basket of goods and services over a specific period.
✔✔What are the 2 Methods for Computing GDP? - ✔✔The two methods for computing
GDP are the Income Approach and the Expenditure Approach.
✔✔What is the Income Approach? - ✔✔The Income Approach calculates GDP by
summing all incomes earned by factors of production in an economy, including wages,
profits, rents, and taxes.
✔✔What is the Expenditure Approach? - ✔✔The Expenditure Approach calculates GDP
by summing all expenditures made in an economy, including consumption, investment,
government spending, and net exports.
, ✔✔What is a transfer payment? - ✔✔A transfer payment is a payment made by the
government to individuals without any exchange of goods or services, such as social
security or unemployment benefits.
✔✔What is Gross Domestic Product (GDP) - Expenditure Approach? - ✔✔GDP using
the Expenditure Approach is calculated as the sum of consumption expenditures,
investment expenditures, government expenditures, and net exports.
✔✔What are consumption expenditures? - ✔✔Consumption expenditures are the total
spending by households on goods and services for personal use.
✔✔What are investment expenditures? - ✔✔Investment expenditures are the spending
on capital goods that will be used for future production, including business investments
in equipment and structures.
✔✔What are government expenditures? - ✔✔Government expenditures are the total
spending by the government on goods and services, including public services and
infrastructure.
✔✔What are net exports? - ✔✔Net exports are the value of a country's total exports
minus its total imports, indicating the trade balance.
✔✔What are exports? - ✔✔Exports are goods and services produced in one country
and sold to another country.
✔✔What are imports? - ✔✔Imports are goods and services purchased by a country
from another country.
✔✔What is nominal GDP? - ✔✔Nominal GDP is the total value of all goods and
services produced in a country at current market prices, without adjusting for inflation.
✔✔What is real GDP? - ✔✔Real GDP is the total value of all goods and services
produced in a country, adjusted for inflation, reflecting the true growth of the economy.
✔✔What is the GDP deflator? - ✔✔The GDP deflator is a measure of the level of prices
of all new, domestically produced, final goods and services in an economy, used to
convert nominal GDP into real GDP.
✔✔What are 2 facts about U.S. Real GDP growth? - ✔✔1. U.S. Real GDP growth has
historically averaged around 3% per year. 2. Real GDP growth can be affected by
various factors including consumer spending, investment, and government policies.
QUESTIONS AND ANSWERS SURE A+
✔✔Entrepreneurship - ✔✔The ability and willingness to combine land, labor, and capital
to create and manage a business.
✔✔The Production Possibilities Frontier - ✔✔A curve that illustrates the maximum
feasible amount of two goods that can be produced with available resources and
technology.
✔✔4 Concepts Illustrated by the PPF Curve - ✔✔1. Scarcity, 2. Trade-offs, 3.
Opportunity costs, 4. Efficiency.
✔✔4 PPF Curve Assumptions - ✔✔1. Resources are fixed, 2. Technology is constant,
3. All resources are fully employed, 4. Production is efficient.
✔✔Productive Efficiency - ✔✔A situation in which the economy cannot produce more of
one good without producing less of another good.
✔✔Law of Increasing Opportunity Costs - ✔✔As production of one good increases, the
opportunity cost of producing an additional unit rises.
,✔✔Specialization - ✔✔The process by which individuals or groups focus on a limited
scope of tasks to gain greater efficiency and productivity.
✔✔Gains from Specialization - ✔✔The benefits that arise when individuals or entities
concentrate on producing goods or services in which they have a comparative
advantage, leading to increased overall output and efficiency.
✔✔Absolute Advantage - ✔✔The ability of an individual, company, or country to
produce more of a good or service with the same amount of resources than another
entity.
✔✔Comparative Advantage - ✔✔The ability of an individual, company, or country to
produce a good or service at a lower opportunity cost than another entity, which
encourages trade and specialization.
✔✔Imports - ✔✔Goods and services that are brought into a country from abroad for
sale.
✔✔Exports - ✔✔Goods and services that are produced in one country and sold to
another country.
✔✔What are the 3 Goals of Macroeconomics? - ✔✔The three goals of macroeconomics
are economic growth, full employment, and price stability.
✔✔What is inflation? - ✔✔Inflation is the rate at which the general level of prices for
goods and services rises, eroding purchasing power.
✔✔What is deflation? - ✔✔Deflation is the decrease in the general price level of goods
and services, often associated with reduced consumer spending.
✔✔What is the inflation rate? - ✔✔The inflation rate is the percentage change in the
price level of a basket of goods and services over a specific period.
✔✔What are the 2 Methods for Computing GDP? - ✔✔The two methods for computing
GDP are the Income Approach and the Expenditure Approach.
✔✔What is the Income Approach? - ✔✔The Income Approach calculates GDP by
summing all incomes earned by factors of production in an economy, including wages,
profits, rents, and taxes.
✔✔What is the Expenditure Approach? - ✔✔The Expenditure Approach calculates GDP
by summing all expenditures made in an economy, including consumption, investment,
government spending, and net exports.
, ✔✔What is a transfer payment? - ✔✔A transfer payment is a payment made by the
government to individuals without any exchange of goods or services, such as social
security or unemployment benefits.
✔✔What is Gross Domestic Product (GDP) - Expenditure Approach? - ✔✔GDP using
the Expenditure Approach is calculated as the sum of consumption expenditures,
investment expenditures, government expenditures, and net exports.
✔✔What are consumption expenditures? - ✔✔Consumption expenditures are the total
spending by households on goods and services for personal use.
✔✔What are investment expenditures? - ✔✔Investment expenditures are the spending
on capital goods that will be used for future production, including business investments
in equipment and structures.
✔✔What are government expenditures? - ✔✔Government expenditures are the total
spending by the government on goods and services, including public services and
infrastructure.
✔✔What are net exports? - ✔✔Net exports are the value of a country's total exports
minus its total imports, indicating the trade balance.
✔✔What are exports? - ✔✔Exports are goods and services produced in one country
and sold to another country.
✔✔What are imports? - ✔✔Imports are goods and services purchased by a country
from another country.
✔✔What is nominal GDP? - ✔✔Nominal GDP is the total value of all goods and
services produced in a country at current market prices, without adjusting for inflation.
✔✔What is real GDP? - ✔✔Real GDP is the total value of all goods and services
produced in a country, adjusted for inflation, reflecting the true growth of the economy.
✔✔What is the GDP deflator? - ✔✔The GDP deflator is a measure of the level of prices
of all new, domestically produced, final goods and services in an economy, used to
convert nominal GDP into real GDP.
✔✔What are 2 facts about U.S. Real GDP growth? - ✔✔1. U.S. Real GDP growth has
historically averaged around 3% per year. 2. Real GDP growth can be affected by
various factors including consumer spending, investment, and government policies.
