1. Graph Quiz # 1 Collection

2. Economic Growth Illustrated
Capital Goods 
PPC
PPC1
Consumer Goods

3. Economic Decline Illustrated
Production Possibilities Curve
Capital Goods 
PPC
PPC1
Consumer Goods

4. Increase in Demand
Burritos P S p1 p D1 D Q q q1
D  .: P ↑ & Q ↑

5. Decrease in Demand P S p p1 D D1 Q q1 q
D  .: P↓ & Q↓

6. Increase in Supply P S S1 p p1 D Q q q1
S  .: P ↓ & Q ↑

7. Decrease in Supply S1 P S p1 p D Q q1 q
S  .: P↑ & Q↓

8. AD/AS Model
Full Employment equilibrium exists where AD intersects SRAS & LRAS at the same point.
AD/AS
LRAS AS PL
PLf AD YF
GDPR

9. Recessionary Gap
A recessionary gap exists when equilibrium occurs below full employment output.
LRAS AS PL
PLe AD Ye YF
GDPR

10. Inflationary Gap
An inflationary gap exists when equilibrium occurs beyond full employment output.
LRAS AS PL
PLe AD YF Ye
GDPR

11. C↑, IG↑, G↑ and/or XN↑ .: AD  .: GDPR↑ & PL↑ .: u%↓ & π%↑
Increase in AD
LRAS AS PL 
PLf 
PLe
AD1 AD  Ye YF
GDPR
C↑, IG↑, G↑ and/or XN↑ .: AD  .: GDPR↑ & PL↑ .: u%↓ & π%↑

12. C↓, IG↓, G↓ and/or XN↓ .: AD  .: GDPR↓ & PL↓ .: u%↑ & π%↓
Decrease in AD
LRAS PL AS 
PLe 
PLf AD
AD1  YF Ye
GDPR
C↓, IG↓, G↓ and/or XN↓ .: AD  .: GDPR↓ & PL↓ .: u%↑ & π%↓

13. Increase in AS Input Prices↓, Productivity↑, and/or Deregulation
LRAS PL
AS1 
PLe 
PLf AD  Ye YF
GDPR
Input Prices↓, Productivity↑, and/or Deregulation
.: SRAS  .: GDPR↑ & PL↓ .: u%↓ & π%↓

14. Decrease in AS Input Prices↑, Productivity↓, and/or Regulation
LRAS PL AS 
PLe 
PLf AD  Ye YF
GDPR
Input Prices↑, Productivity↓, and/or Regulation
.: SRAS  .: GDPR↓ & PL↑ .: u%↑ & π%↑

15. Increase in the Demand for Loanable FundsQ q q1
D  .: r% ↑ & Q ↑

16. Decrease in the Demand for Loanable FundsQ q1 q
D  .: r% ↓ & Q ↓

17. Increase in the Supply of Loanable FundsQ q q1
SLF  .: r% ↓ & QLF ↑

18. Decrease in the Supply of Loanable Funds
QLF q1 q
SLF  .: r% ↑ & QLF ↓

19. Money Market i% MS MD q Q
The equilibrium of MS & MD determines the nominal interest rate (i%). MD is downward sloping because the nominal interest rate is the opportunity cost of holding money. MS is vertical because it is independent of the interest rate.

20. Increase in Money DemandMS i1  i 
MD1 MD Q Q
MD .: i%↑

21. Decrease in Money DemandMS i  i1 MD 
MD1 Q Q
MD .: i%↓

22. Increase in Money SupplyMS
MS1 i  i1  MD Q Q1 Q
MS .: i%↓

23. Decrease in Money Supply
MS1 MS i1   i MD Q1 Q Q
MS .: i%↑

24. .: £ appreciates relative to the $
Increase in the Demand for the British Pound relative to the US. $
Market for British Pound
$/£ S e1 e D1 D Q q q1
D£  .: e ↑ & Q£ ↑
.: £ appreciates relative to the $

25. .: ¥ depreciates relative to the £
Decrease in the Demand for Yen relative to the British Pound
Market for Japanese Yen
£/¥ S e e1 D D1 Q q1 q
D¥  .: e ↓ & Q¥ ↓
.: ¥ depreciates relative to the £

26. .: $ depreciates relative to €
Increase in the Supply of U.S. Dollars relative to the Euro
Market for US. Dollar
€ / $ S S1 e e1 D Q q q1
S$  .: e (ex. rate) ↓ & Q$ ↑
.: $ depreciates relative to €

27. .: ¥ appreciates relative to €
Decrease in the Supply of Yen relative to the Euro
Market for Japanese Yen
€/¥ S1 S e1 e D Q q1 q
S¥  .: e ↑ & Q¥ ↓
.: ¥ appreciates relative to €