Transcript AP Macro reminders

AP Economics
Reminders
• Draw and label your graphs! Label
your axes!
• AD/AS – start your graph where it
tells you to (inflation, recession, etc)
• AD/AS – Draw ASLR (Qf)
• AD/AS – only graph w/ GDP on x-axis;
only graph where S and D are AS and
AD
• Monetary policy – FED; money market
• Fiscal policy – Congress/Pres.;
loanable funds market
• Interest rates affect Investment and
interest-sensitive consumption
• Money market – vertical S
• Loanable funds market – upward
sloping S
• Foreign exchange – if D for one
increases or decreases, S for the
other does the same
• If one currency appreciates, the
other depreciates
• Comparative advantage – OOO, IOU
• Money creation – if original deposit is
new $, it must be added to created $
to determine total increase to the
money supply
• Budget deficit, savings – loanable
funds market
• Real = nominal adjusted for inflation
• Currency appreciates if interest
rates rise; depreciates if i falls
• Open-market operations – FED buys
bonds (expansionary); FED sells
bonds (contractionary)
• More I means more capital stock;
leads to larger shift in PPF and ASLR
• Expansionary fiscal policy increases
i – I is crowded out; $ appreciates
decreasing net exports
• Easy money policy decreases i – I
increases; $ depreciates increasing
net exports
• Keynesian – SR, govt. should help
• Classical – govt. should butt out; LR
• Monetarism – monetary rule; rational
expectations – both are classical
• LR – wages adjust; GDP falls, income
falls; GDP rises, income rises
• Know your Phillips Curves
• Get a good night’s sleep
• 2 #2 pencils; pen for FRQ’s
• Take your time!
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Rooms:
A – Fo – M1
Fr – Lou – M2
Low – Pi – M3
Po – V – M4
W – Z – F10