Download File

Name __________________________________
AP Economics
Macroeconomics
Macro Terms
Absolute advantage
AD
Adverse selection
Aggregate expenditures
Appreciation
AS
Assets
Automatic stabilizers
Autonomous consumption
Autonomous investment
Balance of payments
Balanced budget multiplier
Benjamin Shalom Bernanke
Big Mac index
Bond
Business cycle
Capital account
CD (certificate of deposit)
Classical dichotomy
Classical theory
Closed economy
Command economy
Commodity money
Comparative advantage
Consumer confidence
Contraction
Contractionary policy
Cost-push inflation
CPI
Credit Crunch
Crowding out
Current account
Cyclical unemployment
Deficit
Deficit spending
Deflation
Demand pull inflation
Depreciation
Discount rate
Discouraged Workers
Equilibrium
Exchange rate
Exchange rate effect
Expansion
Expansionary policy
Fed chairman
Fed funds rate
Federal Reserve
Fiat money
Fiscal policy
Fisher effect
Flat taxes
Flexible Wages
Flexible Prices
Flow of expenditures
Flow of income
Foreign currency exchange market
Fractional reserve banking
Frictional unemployment
GDP
GDP deflator
Inflation
Inflation Expectations
Interest rate effect
Investment
Keynesian range
Keynesian theory
Land
Liabilities
Liquidity
Liquidity Trap
Lorenz curve
M1
M2
Macroeconomics
Market economy
Market for loanable funds
Misperceptions
Mixed economy
Monetarists
Monetary neutrality
Monetary policy
Money market
Money multiplier
Money supply
Moral hazard
MPC
MPS
MS
Multiplier
Net Foreign Investment (aka Net Capital Outflow)
Nominal exchange rate
Nominal GDP
Nominal interest rate
Offsetting policies
Okun’s rule of thumb
Open economy
Open market operations (OMOs)
Opportunity cost
Paradox of thrift
Peak/boom
Per capita GDP
Phillips curve (SR&LR)
Price level
Production possibilities curve
Progressive taxes
Purchasing power parity
Quantity theory of money
Rational expectations theory
Real exchange rate
Real GDP
Real interest rate
Recession
Reserve requirement
Rule of 70
Sacrifice Ratio
Savings
Says Law
Seasonal unemployment
Stagflation
Sticky prices
Sticky wages
Stock
Structural unemployment
Supply curve
Supply push
Surplus
Tax multiplier
Trough
Velocity of money
Wealth effect
Yf
Important Things to Know for the Macro AP
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
What are the major macroeconomic goals and how do we measure them?
What is GDP and how is it measured?
What is Per Capita GDP and how is it measured? Why is it a good measure of a nation’s standard of living?
What are the components of GDP and how much does each impact the economy?
What is inflation? How does the government track it?
What is the difference between any value that is nominal and any value that is real?
How is unemployment calculated? Who is counted as employed? Who is not counted but should be?
What factors create long-run growth in an economy? How are they connected to the production possibilities curve?
What factors shift the AS curve?
On an AS/AD curve, why does the AD curve slope downward?
Why does the SRAS curve slope upward?
Why is the LRAS curve vertical?
In the short run, what factors shift aggregate demand?
What is fiscal policy? What is the difference between expansionary and contractionary fiscal policy?
How does fiscal policy attempt to move the AD curve back toward full employment?
What are the tools of monetary policy?
How does monetary policy attempt to move the AD curve back to full employment?
What is a multiplier? How does it affect monetary or fiscal policy?
What is the difference between the expenditure multiplier and the money multiplier?
What are banking reserves? How are they connected to the money multiplier?
What is the marginal propensity to consume (MPC)? What is the marginal propensity to save (MPS)? How are they
connected to the spending multiplier?
Why is the balanced budget multiplier equal to 1?
What has a bigger effect on GDP – a decrease in taxes or an increase in government spending? Use multipliers to explain.
What is the difference between government debt and deficit? Between public and private debt?
If the government borrows a lot of money to conduct fiscal policy, whom will it crowd out of the market for loanable funds?
What is the money market? What is the “demand for money”? Who controls the supply of money in the money market?
What causes the money supply to shift?
What causes the demand for money to shift?
What is the difference between asset demand and transaction demand for money?
Why is the interest rate in the MM a nominal interest rate?
What is the market for loanable funds?
Where does the supply of loanable funds come from?
Where does the demand for loanable funds come from?
Why is the interest rate found in the loanable funds market a real interest rate?
What causes the supply or demand for loanable funds to shift?
When real interest rates fall, what is the effect on AD and the economy?
When real interest rates rise, what is the effect on AD and the economy?
That is meant by the equation MV=PQ? How is it connected to monetary policy?
What are the main components of Keynesian theory?
What are the main components of Classical theory?
What do Monetarists believe is the key to controlling the business cycle?
What role does inflation play in the theory behind Rational Expectations?
What is the relationship between bond prices and inflation?
What is net foreign investment (NFI)? What is the difference between direct and portfolio investment?
What causes NCO (NFI) to become more positive? More negative?
What is the balance of payments? Why is it always equal to zero?
What things are included in the current account? The capital account?
What factors cause the value of the U.S. dollar to rise? To fall?
What factors will cause the production possibilities curve to expand? Why are those factors considered the “real” factors for
the economy?
Name __________________________________
AP MACRO
Draw the following graphs using axes below. Remember to clearly label each graph.
A. Macroeconomics
1.
2.
3.
4.
5.
6.
7.
PPC: Show a PPC of Capital goods vs Commercial goods and the increase in land (a factor of production)
LF: Show a LF graph and what happens if the US incurs a large government budget deficit for the year.
LF: Show a LF graph and what happens if there is a large net capital inflow (-NCO) into the US.
LF: Show a LF graph and what happens if there is an increase in the desire to be a homeowner.
MM: Show a MM graph and what happens if the Federal Reserve buys bonds to combat high U-rate.
MM: Show a MM graph and what happens if people expect higher inflation rates in the near future.
MM: Show a MM graph and how to Federal Reserve could to combat a decrease in inflation expectations
in order to keep the nominal interest rate (federal funds rate) constant.
8. AS/AD: Show a SR decrease in consumption and the long run adjustment if no policy actions take place.
9. AS/AD: Show the SR effects of a drastic increase in the cost of oil.
10. AS/AD: Assume the economy is overheating. Show the effect of an increase in the income tax rate.
11. Phillips Curve: Sketch a SRPC and show the effect of a negative exogenous shock (hurricane).
12. Phillips Curve: Sketch a SRPC & LRPC and show an economy that starts in long run equilibrium but then
Experiences a decrease in consumption. Finally, show the LR result if no policy action takes place.
13&14. Forex: US dollar vs Chinese Yuan. Show the effect of lower real interest rates in China.
14&15: Forex: US dollar vs Chinese Yuan. Show the effect of higher inflation expectations in USA.
16. Laffer Curve: Sketch a Laffer Curve. Label a point A that represents a situation where the gov’t
Could decrease taxes and increase tax revenue.
17. Lorenz Curve: Sketch a Lorenz Curve that shows 50% of the USA only owning 20% of the wealth.
18,19,20. Triptych: Sketch LF, NCO & Real Exchange Rate Graphs and show the effect of the US gov’t
Running a large 2017 Federal Budget Deficit.