Final Flashcards
balance of payments (BoP)
CUR + CAP - ^OIR
CUR =
BoT + BoS + NFII
CAP =
STCF + LTCF
if XR increases
currency appreciates
if XR decreases
currency depreciates
terms of trade (ToT)
(export price index / import price index) x 100
effect of tariffs on consumers
lose
effect of tariffs on domestic producers
gain
effect of tariffs on foreign producers
lose
effect of tariffs on government
gain
overall effect of tariffs
lose
if AD increases with KAS
full impact is on Y, P is unaffected
if AD increases with LRAS
full impact is on P, Y is unaffected
if AD increases with SRAS
depends on where you are on the curve
SRAS increases
P decreases, Y increases
SRAS decreases
P increases, Y decreases
monetary policy in a closed economy: expansionary
MS increases, r decreases, I and C increase, AD increases
monetary policy in a closed economy: contractionary
MS decreases, r increases, I and C decrease, AD decreases
monetary policy in an open economy: expansionary
currency depreciates, NX increase
monetary policy in an open economy: contractionary
currency appreciates, NX decreases
marginal propensity to save
^PS / ^Y
1 – mpc = mps
multiplier
1 / (1 – mpc) OR 1 / mps
marginal propensity to import
^M / ^Y
open economy multiplier (K)
1 / (1 – mpc + mpi) OR 1 / (mps + mpi)
tax multiplier (K*)
-mpc x K
^G =
^Y / K
^T =
^Y / K*
during a recession
G should increase, T should decrease
during a boom
G should decrease, T should increase
