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Download AP Macroeconomics: Review Terms/Formulas
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AP Macroeconomics: Review Terms Terms with an asterisk (*) to the left need to be in your dictionary I. Basic Economic Concepts II. Measurement of Economic Performance III. National Income and Price Determination: macroeconomics microeconomics * scarcity * tradeoffs/opportunity cost aggregate * ceteris paribus independent variable dependent variable utility marginal utility land, labor, capital, entrepreneurship + Factors of Production * full employment allocative efficiency * capital goods * consumer goods production possibilities curve/frontier law of increasing opportunity costs circular flow model resource market product market law of demand law of supply demand versus quantity demanded diminishing marginal utility supply versus quantity supplied elastic, inelastic equilibrium prices and quantities rationing function of prices ceilings floors * substitute goods * complementary goods * transfer payments natural monopoly spillovers (costs, benefits) subsidy normal growth/secular trend * expansion * contraction * peak * trough * gross domestic product (GDP) gross national product (GNP) * multiple counting C + Ig + G + Xn W + R + I + P + SA depreciation/CFC net investment stock of capital net domestic product (NDP) indirect business taxes net foreign factor income aggregate demand aggregate supply consumption schedule saving schedule APC APS MPC MPS saving range dissaving range * investment demand national income (NI) personal income (PI) * disposable income (DI) consumption savings expected rate of return nominal interest rate real interest rate multiplier effect (1/1-MPC) real domestic output (GDPr) GDP price index * nominal versus real * CPI basket of goods GDP deflator per capita rule of 70/rule of 72 productivity rate of growth actual versus potential GDP GDP gap * demand pull inflation * cost push inflation * rate of inflation * labor force employed unemployed * discouraged * natural rate of unemployment Okun's law COLA's anticipated inflation hyperinflation * frictional unemployment * structural unemployment * cyclical unemployment * seasonal unemployment * Stagflation determinants of aggregate demand determinants of aggregate supply wealth effect liquidity wealth government multiplier crowding out effect per unit production costs LRAS SRAS Say's Law Keynesian Fiscal Policy Fed Monetary Policy The ratchet sticky wages nondiscretionary spending discretionary spending * stabilizers leaks injections * budget deficit * budget surplus balanced budget multiplier expansionary fiscal policy contractionary fiscal policy progressive tax systems full employment budget supply side policies * crowding out effect IV. Financial Sector VII. Open Economy: International Trade and Finance M-1, M-2, M-3 stocks bonds transactional demand asset demand * money market * loanable funds market bond market Federal Board System Board of Governors FDIC OMC (FOMC) Beige Book open market operations future values of money fed fund rate discount rate prime rate * required reserves * excess reserves * reserve multiplier (money multiplier) * Liquidity * easy money policies * tight money policies * velocity of money net export effect fiscal versus monetary: cause and effect gold standard Bretton Woods system WTO IMF NAFTA CAFTA (DR-CAFTA) EU * absolute advantage * comparative advantage * terms of trade * "capital inflow" * "capital outflow" output efficiency input efficiency * trade barriers * tariffs non-tariff barriers price dumping * balance of payments * current account * capital account * trade surplus * trade deficit * official reserves * currency appreciation * currency depreciation fixed exchange rates floating exchange rates V. Inflation, Unemployment, and Stabilization Policies Phillips Curve SR Phillips Curve LR stagflation disinflation effects Laffer Curve relations annually balanced budget cyclically balanced budget * crowding out effect * MV = PQ VI. Economic Growth and Productivity human capital physical capital growth policy options net exports dollarization remittances purchasing power parity of currencies multinational corporations joint ventures executive agreements congressional-executive agreements most favored nations (normal trade relations) ad-valorem tariff
