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Transcript
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.