Download Chapter 17 homework - Mr. Sadow`s History Class Website

AP Macroeconomics and Microeconomics
Mr. Sadow
Chapter 17 Homework
Use the Chapter 17 presentation on our website
Pages 1-15 (approximately), due by
1. Compare and contrast microeconomics and macroeconomics.
2. What is the resource market? Briefly explain how it works.
3. Define nominal GDP. What are its other two names? What four components make it up?
4. Define real gross domestic product. What are its other two names? How is it different from nominal GDP?
5. What does AS stand for?
6. What two things increase real output?
7. Draw two graphs, one showing an increase in real output (real GDP) and one showing a decrease.
8. What is the formula for real GDP? Create an example comparing nominal and real GDP.
9. Review the chapter presentation for Chapter 1 online. A little studying now will go a long way later! Can only help!! 
Pages 16-31 (approximately), due by
1. Define long-run (LR).
2. Define economic growth.
3. Define short-run (SR).
4. Define economic fluctuations/business cycles.
5. Why does real GDP fluctuate around potential GDP?
6. What are the determinants of potential GDP?
7. Define potential GDP. Why is it a good indicator of real GDP?
8. Define contraction and recession.
9. Define peak, trough, recovery, and expansion. Create a graph showing potential GDP real GDP over time. Include peak,
trough, recovery, contraction, expansion, and possible recession.
10. Even after a recession is technically over, why do many people still feel that bad economic times are occurring?
11. Using any numbers you want to, create a year-to-year chain showing real GDP growth rate. Start in 2010 and end in
2012. What was the annual growth rate? Why is 2010 the base year? Why do we use the term “chained?”
12. Define economic growth theory and economic fluctuations theory and how each fit together to create macroeconomic
theory.
Pages 32-45 (approximately), due by
1. Define real income.
2. Define real GDP per capita. Give an example using any numbers you want. What is the most important factor in
increasing real GDP per capita in a country? Why doesn’t in increase in population itself increase real GDP per capita?
3. Draw a graph showing how an increase in real GDP per capita impacts aggregate supply (AS). Draw another graph
showing how a decrease in real GDP per capita impacts aggregate supply (AS).
4. How do you calculate the annual growth rate of real GDP per capita? What does the rate indicate? Give an example
using any numbers you want.
5. Define short-run (SR) economic growth rate. Define long-run (LR) economic growth rate. What are the three best ways
to enhance a country’s LR economic growth rate? Why are humans (workers) considered capital?
6. Review the chapter presentation for Chapter 2 online. A little studying now will go a long way later! Can only help!! 
Pages 46-54 (approximately), due by
1. Compare and contrast recession and depression. Why do most current recessions feel worse than past ones?
2. What four components make up real GDP?
3. What three economic variables change over time and impact real GDP?
4. Define unemployment rate. Give an example. Define labor force. What is the formula for the unemployment rate?
5. What will happen to a country’s unemployment rate if aggregate demand (AD) decreases? Increases? Show both
graphically using AS and AD. What happens to unemployment when government spending increases?
6. Define full employment. Why isn’t full employment at 0% during full employment?
7. What does full employment indicates concerning a country’s resources and labor?
8. What happens when hours are cut in an economy?
9. What do classical economists believe?
10. What is the key factor in decreasing unemployment?
11. Review the chapter presentation for Chapter 3 online. A little studying now will go a long way later! Can only help!! 
Pages 59-75 (approximately), due by
1. Define inflation, inflation rate, and expected rate of inflation.
2. Define stagflation.
3. Define demand-pull inflation.
4. Define sticky-price. Why do sticky-price situations occur?
5. How does aggregate demand (AD) impact inflation, positively and negatively?
6. Define hyperinflation.
7. Compare and contrast cost-push and demand-pull inflation.
8. Why do you think inflation increases prior to recessions or depressions?
10. Define deflation.
11. Define interest rate. Using any numbers you want, create an example.
12. Compare and contrast fixed and variable interest rates.
13. Using any numbers you want, create an example of a situation where a bank “wins” because of inflation when lending
money and another where it “loses” because of inflation when lending money.
14. How does the interest rate impact consumers’ decisions?
Pages 76-94 (approximately), due by
1. Compare and contrast nominal interest rate and real interest rate. What is the formula for the real interest rate?
2. What circumstances lead to an increase in nominal interest rates?
3. Define federal funds rate. How is the rate used to increase and decrease a country’s money supply?
4. How is the federal funds rate used to stimulate or cool off an economy running too fast?
5. How does inflation impact the federal funds rate (2 ways)?
6. Define short-run aggregate supply (SRAS). What is it used for? Create a graph showing SRAS.
7. Why is SRAS referred to as a supply-side policy? What can affect SRAS and why?
8. Define short-run equilibrium and price level. Create a graph and include both.
9. Define equilibrium price level and equilibrium output level. Create a graph and indicate the equilibrium price level and
equilibrium output level.
10. What would make the SRAS curve shift right (increase)? Create a graph and show an increase.
11. What can an increase in SRAS lead to?
12. What would make the SRAS curve shift left (decrease)? Create a graph and show a decrease.
13. What can a decrease in SRAS lead to?
Pages 101-125 (approximately), due by
1. Define long-run aggregate supply (LRAS). Why is the LRAS curve perfectly vertical?
2. Define long-run equilibrium. Create a graph showing long-run equilibrium.
3. What happens when the LRAS and AD both shift right? Create a graph showing both shifts (double-shift).
4. What does the LRAS curve communicate or indicate (2 things)?
5. What would shift the LRAS curve to the right (4 things)? What does a shift right of the LRAS indicate?
6. What does the LRAS communicate about wages and the price level over time?
7. Compare and contrast capital and consumer goods. Define capital.
8. Define aggregate demand (AD).
9. Why is AD referred to as a demand-side policy?
10. What role does AD have in economic fluctuations theory.
11. What can cause an increase in AD?
12. Why does real GDP appear to fluctuate around potential GDP?
13. What shifts AD to the left? What happens when AD shifts to the left (decreases)?
Pages 126-141 (approximately), due by
1. Define recessionary gap. Draw a graph indicating a recession.
2. Define inflationary gap. Draw a graph indicating inflation.
3. What is production possibilities curve/frontier (PPC/PPF)?
4. Draw two graphs, one with increasing opportunity costs and one with constant costs. Label the following on both:
efficient/full employment, expansion, contraction, and recession.
5. What does a point to the left of the efficient/full employment line in a PPC/PPF indicate (5-6 things)?
6. What does a point to the right of the efficient/full employment line in a PPC/PPF indicate (3 things)?
7. Review the chapter presentation for Chapter 4 online. A little studying now will go a long way later! Can only help!! 
Pages 142-183 (approximately), due by
1. Compare and contrast absolute and comparative advantage. Create a chart and a graph, each with two countries and two
products. Using any numbers you want, explain which country has the absolute advantage and which country has the
comparative advantage in each scenario for each product.
2. What determines what product a country should specialize in?
3. What are the three production functions/variables of real GDP?
4. Define supply-side policy.
5. What role does incentives play in in growing business capital?
6. Define fiscal policy. When is fiscal policy used and what are its primary tools (2)?
7. How can fiscal policy help a weak economy get stronger?
8. Define demand-side policies. What is its goal?
9. Define money supply. What does the increase and decrease in it do to real GDP? How does the government increase the
money supply?
10. Define monetary policy and expansionary monetary policy. What entity is in charge of it?
11. What does the Fed do to control inflation in the economy? How can the Fed improve recession/depression impacts?
12. Review the chapter presentation for Chapter 5 online. A little studying now will go a long way later! Can only help!! 