AP FINAL MACRO

Question 1

PPC CURVE

Answer 1

Shows:
Opportunity Costs
Unemployment/Inefficiency
Effiency
Economic Growth (when it shifts right)

Question 2

AD/AS

Answer 2

y = Price Level
x= RGDP

Bottom: Q

Recession: When Dot is on left side of LRAS (GOVT NEEDS TO HAVE EXPANSIONARY POLICY TOO)

Inflationary Gap: When dot is right of LRAS (GOVT NEEDS TO HAVE CONTRACTIONARY POLICY TOO)

Question 3

Demand Pull Inflation

Answer 3

That when AD shifts right

Question 4

Stagflation (Supply Push Inflation)

Answer 4

SRAS goes Left

Question 5

AD Curve Reason of Slope

Answer 5

Real Balances Effect
Interest Rate Effect
Foreign Purchases Effect

Question 6

Money Market Graph

Answer 6

when FED changes money supply to change NOMINAL interest

y = i
x = Total Money Demand

MS Strait line
Md slant

This graph connects with the Id graph as well

Question 7

Investment Demand Graph

Answer 7

y = i
x = Q of Investment

Question 8

Loanable Funds Market

Answer 8

y= Real Interests Rate (i)
x= Q of Loanable Funds
SD Graph

This graph shows how loanable funds effect REAL interest rates

Question 9

Foreign Exchange Market Graph

Answer 9

2 Graphs that show which one depreciates or appreciates

If lets say dollar depreciates it means its S went up and Demand went down, while the pound appreciated in which its D went up and supply went down

Question 10

Phillips Curve

Answer 10

y= rate of inflation

Question 11

Current Account

Answer 11

goods and services Balance of Trade

Question 12

Capital/Financial Account

Answer 12

financial assets we have surplus

Question 13

Trade Deficit XM

Answer 13

h