Review for Exam 3 2016.

Slides:



Advertisements
Similar presentations
AP Macro Review Fun with formulas!.
Advertisements

Begin $100 $200 $300 $400 $500 GraphsEconomicEquations Unit 1 Unit 3 KeyTerms Unit 2.
AP Economics Dictionary
Macro Free Responses Since 1995 GDP Economic Growth Money and Banking Monetary Policy Fiscal Policy Exchange Rates Inflation Recession Theories.
The study of the behavior and decision making of the entire economy Examines major trends for the economy as a whole.
MCQ Chapter 9.
Connecting Money and Prices: Irving Fisher’s Quantity Equation M × V = P × Y The Quantity Theory of Money V = Velocity of money The average number of times.
GOOD NEWS/BAD NEWS: ISSUES IDENTIFIED ON THE 2011 AP MACRO TEST Chris Cannon Sandy Creek High School.
What is the law of increasing costs?
 Monetary policy- changes in the money supply to fight inflations or recessions.
 Circular Flow of Income is a simplified model of the economy that shows the flow of money through the economy.
Spending, Income, and Interest Rates Chapter 3 Instructor: MELTEM INCE
Final Exam Study Guide Final Exam: Wednesday, May 11th 5:30pm-7:30pm DeBartolo Hall Room 356.
Using Policy to Affect the Economy. Fiscal Policy  Government efforts to promote full employment and maintain prices by changing government spending.
Module 31 Monetary Policy & the Interest Rate
COMMON MISTAKES ON THE AP MACRO EXAM Compiled by: John Ostick Malvern Prep Malvern, PA
Mr. Weiss Vocabulary Review – Test 4 – Sections 3 & 4 1. aggregate demand curve; 2. contractionary fiscal policy; 3. cyclical unemployment; 4. disposable.
124 Aggregate Supply and Aggregate Demand. 125  What is the purpose of the aggregate supply-aggregate demand model?  What determines aggregate supply.
© 2011 Pearson Education Aggregate Supply and Aggregate Demand 13 When you have completed your study of this chapter, you will be able to 1 Define and.
Aggregate Demand Aggregate demand is the total demand in an economy for all the goods and services produced. The aggregate demand schedule is a schedule.
ECN 202: Principles of Macroeconomics Nusrat Jahan Lecture-10 Fiscal Policy & Monetary Policy.
Copyright © 2004 South-Western The Unemployment- Inflation Relationship— the Phillips Curve Mod 34.
Monetary Policy It influences the Model of the Economy.
1 Sect. 4 - National Income & Price Determination Module 16 - Income & Expenditure What you will learn: The nature of the multiplier The meaning of the.
Opportunity cost - The value of what is given up when you make a choice is the opportunity cost of your decision Positive Economics - Economic analysis.
Begin Graphs Threats to Economy GDP Laws & Policies Formulas Key Terms.
Model of the Economy Aggregate Demand can be defined in terms of GDP ◦Planned C+I+G+NX on goods and services ◦Aggregate Demand curve is an inverse curve.
TRUE/FALSE 1. The Federal Reserve primarily uses open market operations to change the money supply. 2. If the Fed buys bonds in the open market, the money.
GDP - Gross Domestic Product
AP Macroeconomics Sample Multiple Choice ?s
Macroeconomic Relationships a cheat sheet (Note: .: = therefore)
Economics Flashcards # Unit 3 Macroeconomics
Chapter 10 Interest Rates & Monetary Policy
In-Class Final Exam Review
AP Macroeconomics Final Exam Review.
We will: study and discuss how the FED manipulates interest rates in order to manipulate the supply of money to buffer economic cycles I will graph, manipulate,
Monetary and Fiscal Policy Interact
Pizzas (hundred thousands)
Economics Sample Unit 4 Macroeconomics
KRUGMAN’S Economics for AP® S E C O N D E D I T I O N.
Macro Free Responses Since 1995
Short-Run vs. Long-Run.
The Phillips Curve Unemployment vs. Inflation
You will be given the answer. You must give the correct question.
Section 4.
Assume that the United States economy is currently in a recession in a short run equilibrium.
Unit 6: Fiscal Policy.
AD/AS Model & Multipliers
Unit 3: Aggregate Demand and Supply and Fiscal Policy
Unit 3: Aggregate Demand and Supply and Fiscal Policy
Fiscal Policy Test Review
Aggregate Demand.
AD/AS Model & Multipliers
15 C H A P T E R Monetary Policy FEDERAL RESERVE BANK OF THE U.S.
Macroeconomics Review
15 C H A P T E R Monetary Policy FEDERAL RESERVE BANK OF THE U.S.
Unit 4: National Income & Price Determination
AD/AS Fiscal Policy Exit and Fiscal Policy
Exit PPC and Economic Gowth GDP & Rational Expectations
15 C H A P T E R Monetary Policy FEDERAL RESERVE BANK OF THE U.S.
COMMON MISTAKES ON THE AP MACRO EXAM BY: Mr. Veit
Pizzas (hundred thousands)
Macroeconomics Review
Classical and Keynesian Macro Analysis
MACROECONOMICS Practice MC Exam From College Board 2008.
Aggregate Supply and Aggregate Demand
Equilibrium Equilibrium price and quantity are found where the AD and AS curves intersect. At any price level above equilibrium sellers are faced with.
04/08/2019EC2574 D. DOULOS1 AGGREGATE DEMAND AND AGGREGATE SUPPLY.
Equilibrium Equilibrium price and quantity are found where the AD and AS curves intersect. At any price level above equilibrium sellers are faced with.
Presentation transcript:

Review for Exam 3 2016

*Unemployment that results because it take time for workers to search for the jobs that best suit their tastes and skills is called what? You have a choice among structural unemployment, frictional unemployment, and cyclical unemployment. http://reffonomics.com/FullEmployment.html http://www.grokkingecon.com/BR3MC2.html

*Suppose a bank has a 10 percent reserve requirement, $5,000 in deposits, and has lent all it has.  What is the dollar value of the required reserves and how much has been lent? Assets Liabilities $5000 cash $5000 Demand Deposits If you can’t figure out the answer, click on the link below and go to reserve requirement. http://reffonomics.com/TRB2015AAA/TRB/chapter23/moneymarketgraphpart2a.swf

*What three tools can the FED use to increase the money supply? http://reffonomics.com/TRB2015AAA/TRB/chapter23/moneymarketgraphpart2a.swf

*What is the difference between the Federal Funds Rate and the Discount Rate? Click on Discount Rate on the link below. http://reffonomics.com/TRB2015AAA/TRB/chapter23/moneymarketgraphpart2a.swf

*What monetary and fiscal policies shift the aggregate demand curve to the left or to the right?  (two questions) Fiscal Policy Monetary Policy Lesson on Fiscal Policy and Stabilization Policies:  http://www.reffonomics.com/StabilizationPoliciesFiscal.html Lesson on Stabilization Policies of Monetary Policy:  http://reffonomics.com/StabilizationPoliciesMonetary.html

*What happens to price and output if the LRAS curve shifts to the left or to the right?  (Monday's Lecture) Shift the LRAS and figure out what happens to PL and RGDP

*What shifts the SRAS curve to the left or to the right?   Find the answer inside Monday’s lecture.

*If the expenditure multiplier is 10, then what is the Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS)?  (Monday's lecture) Lesson on Expenditure Multiplier:    http://reffonomics.com/TRB2015AAA/TRB/chapter25/spendingmultiplier/Multiplier12final.swf Activity on Expenditure Multiplier:    http://reffonomics.com/TRB2015AAA/TRB/chapter25/spendingmultiplier/MultiplierINTERACTIVEfinal1.swf

*What is the definition of the civilian labor force? http://reffonomics.com/FullEmployment.html http://www.grokkingecon.com/BR3MC2.html http://www.grokkingecon.com/BR3Activities1.html

*Know the difference between an employed person and an unemployed person. http://reffonomics.com/FullEmployment.html

*If the economy is at full employment, what type of unemployment exists? What type of unemployment occurs at Yf?

*Who benefits and who is hurt by inflation?  (two questions) http://www.reffonomics.com/Inflation.html

*What does the LRAS indicate?

*If aggregate demand shifts to the right or to the left, what happens to PL, RGDP, employment, and unemployment? Play with the graph and figure this out.

*If the economy is in long-run equilibrium and the aggregate demand expands quickly without corresponding growth in the economy. So if AD expands quickly without corresponding growth in the economy, then the demand curve moves up the LRAS curve. (hint)

*Using the model of aggregate demand/supply, what happens to real GDP, the price level, and unemployment when consumption spending C increases? You should know this answer by now.

*Stagflation most likely results from:   Look up the term stagflation and show it on this graph.

*Equilibrium real GDP is below full employment and the government lowers household taxes. What happens to RGDP, output, PL, employment, unemployment?   Use the graph to answer this question.

*Which of the following would NOT be an example of contractionary fiscal policy? Contractionary policy happens with both fiscal and monetary policy. There are two tools of fiscal policy and three tools of monetary policy.

*If a bank has $1000 in checking deposits and the bank is required to reserve $100, what is the reserve ratio? How much does the bank have in excess reserves?   Assets Liabilities $1000 cash $1000 Demand Deposits If you can’t figure out the answer, click on the link below and go to reserve requirement. http://reffonomics.com/TRB2015AAA/TRB/chapter23/moneymarketgraphpart2a.swf

*Which is NOT a way that the FED can affect the money supply?   If you know the three tools of the federal reserve, you should be able to answer this question.

The economy is “overheating” or also known as “over full employment *The economy is “overheating” or also known as “over full employment.” To move the economy closer to full employment, the central bank decides that the federal funds rate must be increased. The appropriate open market operation is to ___, which ___ the money supply, ___ aggregate demand, and fights ___.   Can’t help you with this question. Sorry.

 *Given that in a particular country the: Population is 100 Given the number of individuals who are employed Given the number of individuals who are considered officially unemployed Given the number of individuals who are non-institutionalized civilians over the age of 16 Then the labor force participation rate is:   http://www.grokkingecon.com/BR3MC2.html

Assume that an economy is in a recession * Assume that an economy is in a recession. Which policy is likely to create more problems in the short-run?   Know your fiscal and monetary policies that can correct a recessionary gap.

* What is the complete definition of Real Gross Domestic Product   http://www.reffonomics.com/RealGDP.html

Assume that an economy is in a recession * Assume that an economy is in a recession. Which fiscal or monetary policy is likely to create more problems in the short-run?   Know your fiscal and monetary policies that can correct a recessionary gap, but then know which of these policies could create problems.

* Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce investment (capital purchases). Their reaction would initially shift which curve?   You should be able to figure this out.

* The Federal Reserve Bank requires all banks to keep 10 percent of transaction deposits as required reserves. What are the required reserves for LizNedko Community Bank when given the Demand Deposits?   http://www.grokkingecon.com/BR5Activities2.html Scroll down to the 3rd activity, Balance Sheet of Commercial Bank Interactive.

* Given the following data, what is this country’s gross domestic product? Consumption - $22 Investment - $8 Government Purchases - $12 Exports - $5 Imports - $8 http://www.grokkingecon.com/BR3MC4.html

* Know what happens when an economy is on the horizontal segment of the aggregate supply curve and there is a slight increase in AD Go ahead and answer this question by using the graph above.

* If the nominal interest rate is ten percent and the inflation rate is three percent, then the real interest rate is:  Nominal Interest Rates vs. Real Interest Rates:  http://reffonomics.com/InterestRates.html

* If $100 of new autonomous private investment were added to an economy with a marginal propensity to consume of .80, what is the maximum increase in Real GDP?

*What is supply side economics? When aggregate supply (both long run and short run) move to the right.

*Which of the following is most likely to indicate the possibility of a recession occurring?  (increase or decrease in inventories) Inventory not moving (increasing inventories) Inventory moving out (decreasing inventories)

*A graph that captures the GDP or the GDP growth rate of a country at various times throughout a period of years is a _____________. http://www.reffonomics.com/BusinessCycle.html

*What are the four parts of a business cycle? http://reffonomics.com/TRB2015AAA/TRB/chapter28/businesscycleFINAL12.swf

*What is the largest component of aggregate demand? Lecture notes or video or find it on the Internet.

*A change in input prices will affect which curve? You should know the components of AD and what shifts the SRAS and the LRAS

*Which combination of fiscal and monetary policies is most likely to have the greatest impact fighting inflation successfully? Lesson on Fiscal Policy and Stabilization Policies:  http://www.reffonomics.com/StabilizationPoliciesFiscal.html Lesson on Stabilization Policies of Monetary Policy:  http://reffonomics.com/StabilizationPoliciesMonetary.html

*Which of the following would not affect long-run aggregate supply? The same variables that shift the PP curve, shift LRAS.