Download Chapters 22 and 26-27 homework - Mr. Sadow`s History Class

AP Macroeconomics and Microeconomics
Mr. Sadow
Use the Chapters 22 and 26-27 presentation on our website
Chapters 22 and 26-27 Homework
Pages 1-19 due by
1. What is the FED and what does it do?
2. What is the formula for determining the present value of a future amount? Future value of a present amount?
3. Create four scenarios, two showing the present value of a future amount and two showing the future value of a
present amount.
4. Define money supply. What is its acronym?
5. Define M1.
6. Define demand deposit.
7. Define velocity of money and create two examples.
8. Compare disinflation and deflation.
9. Define fiscal policy. “Who” is responsible for it?
10. Define countercyclical fiscal policy. What are its two tools?
11. Draw a factor/resource market (just the essentials). (Chap. 17)
12. Draw a potential GDP graph with economic fluctuations/business cycles. Label everything. (Chap. 17)
13. Draw two aggregate supply (AS) and aggregate demand (AD) graphs in long-run equilibrium. On one show a
shift in demand (D) due to an increase in interest rates. On the other show a shift in supply (S) due to an
increase in the abilities of a labor force (human capital). (Chap. 17)
14. Using our website and Quizlet, review the first 25 definitions in the “ Free response vocabulary- the most
important” Quizlet. This will help you!! 
Pages 20-40 due by
1. Define monetary policy. (crucial!)
2. Explain the classical theory of economics.
3. Define fiscal year and give an example.
4. Explain how the terms budget surplus, balanced budget, and budget deficit are all related.
5. Explain how the terms federal debt and national debt are related but different.
6. Define supplemental.
7. Define transfer payments and give at least two examples.
8. I know I’ve already asked this, but what are the two instruments of fiscal policy? (crucial!)
9. Define discretionary fiscal policy.
10. What is another name for automatic stabilizers? Define them.
11. Draw a AS/AD graph with a recessionary/contractionary gap. Draw a AS/AD graph with a
inflationary/expansion gap. (Chap. 17)
12. Draw a PPC/PPF showing increasing opportunity costs and one showing constant opportunity costs. (Chap.
17)
13. Draw two graphs showing the foreign exchange market between the U.S. and any other country. Show what
will happen shortly in America due to our increasing interest rates. (Chap. 18)
14. Using our website and Quizlet, review definitions 26-40 in the “ Free response vocabulary- the most
important” Quizlet. This will help you!! 
Pages 41-59 due by
1. What are the three “lags” and why are they a problem for those who believe in discretionary fiscal policy?
2. What is a balance sheet?
3. Define asset and liability.
4. Define loans and explain why they are critical for banks.
5. Define and explain reserves/reserve requirement/reserve ratio.
6. Explain the difference between owner’s equity and capital stock.
7. Create two separate balance sheets using the terms from #2-#6 and any numbers you want. Carefully follow #s
2 and 5.
8. What is the deposit expansion multiplier, or just typically called the money multiplier? What is its formula?
Pages 41-59 (cont.)
9. Create two examples with the money multiplier to see how spending today causes financial expansion.
10. What are the “laws” fiscal policy follows to get out of a recession (reduce unemployment and increase GDP)?
11. What are the “laws” fiscal policy follows to decrease inflation (reduce inflation and decrease GDP)?
12. Draw a labor market in equilibrium. Then show a shift in supply (S) due to an increase in wages. (Chap. 20)
13. Draw a money market in equilibrium. Next, indicate on the graph what happens to the demand (D) curve
when prices increase (Chap. 24)
14. Draw a loanable funds market in equilibrium. Indicate on the graph what happens to demand (D) when deficit
spending is occurring. (Chap. 17)
15. Using our website and Quizlet, review the first 9 graphs/formulas in the “Essential Graphs and Formulas”
Quizlet. This will help you!! 
Pages 60-84 due by
1. Compare and contrast stocks and bonds. What is their major difference?
2. What apolitical government entity is responsible for monetary policy?
3. Define central bank independence and explain its importance.
4. What is a commercial bank? Give two examples. Why are commercial banks considered financial
intermediaries?
5. Define central bank. What is America’s central bank?
6. What is the FOMC? What is the role of the group?
7. What are the three tools the FED has to impact our economy? (crucial!)
8. Explain open market operations and their massive importance in our economy. (crucial!)
9. Explain in detail how the FED increases our country’s money supply (decreases unemployment and increases
GDP). (crucial!)
10. Explain in detail how the FED decreases our country’s money supply (decrease inflation and decreases
GDP). (crucial!)
11. Which interest rate does the FED’s actions impact? Which interest rate is then affected by the movement of
the first rate (think of which rate we really care about because we pay it)?
12. Draw a short-run Phillips curve (SRPC). Now show a GDP in recession/contraction on the SRPC.
13. Draw a long-run Phillips curve (LRPC) in equilibrium next to a AS/AD graph in long-run equilibrium.
Indicate on bother graphs what would occur if an economy was in expansion/inflation.
14. Using our website and Quizlet, review graphs/formulas 10-19 (start with the SRPC) in the “Essential Graphs
and Formulas” Quizlet. This will help you!! 
Pages 85-99 due by
1. Define discount rate and explain why it is a FED instrument in monetary policy.
2. Define reserve requirement/reserve ration and explain why it is a FED instrument in monetary policy.
3. Define excess reserves. What is their benefit for a bank?
4. Regarding monetary policy and specifically the reserve ratio, how can it lead to a multiplier effect?
5. What is the formula for the monetary policy money multiplier?
6. Using our website and Quizlet, review graphs/formulas 20-50 (start with the short-run (SR) equilibrium graph)
in the “Essential Graphs and Formulas” Quizlet. This will help you!! 
7. YOU ARE DONE!! CONGRADULATIONS!!! I cannot wait to see how you do on the AP exams!! Please
make me proud , but most of all make yourself proud!! Kick butt on all of your AP and IB exams!! Good
luck!! I am here if I can help in any way.