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AP Economics Reminders

AP Economics Reminders. Draw and label your graphs! Label your axes! AD/AS – start your graph where it tells you to (inflation, recession, etc) AD/AS – Draw ASLR (Qf) AD/AS – only graph w/ GDP on x-axis; only graph where S and D are AS and AD Monetary policy – FED; money market

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AP Economics Reminders

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  1. AP Economics Reminders

  2. Draw and label your graphs! Label your axes! • AD/AS – start your graph where it tells you to (inflation, recession, etc) • AD/AS – Draw ASLR (Qf) • AD/AS – only graph w/ GDP on x-axis; only graph where S and D are AS and AD • Monetary policy – FED; money market • Fiscal policy – Congress/Pres.; loanable funds market • Interest rates affect Investment and interest-sensitive consumption

  3. Money market – vertical S • Loanable funds market – upward sloping S • Foreign exchange – if D for one increases or decreases, S for the other does the same • If one currency appreciates, the other depreciates • Comparative advantage – OOO, IOU • Money creation – if original deposit is new $, it must be added to created $ to determine total increase to the money supply

  4. Budget deficit, savings – loanable funds market • Real = nominal adjusted for inflation • Currency appreciates if interest rates rise; depreciates if i falls • Open-market operations – FED buys bonds (expansionary); FED sells bonds (contractionary) • More I means more capital stock; leads to larger shift in PPF and ASLR • Expansionary fiscal policy increases i – I is crowded out; $ appreciates decreasing net exports

  5. Easy money policy decreases i – I increases; $ depreciates increasing net exports • Keynesian – SR, govt. should help • Classical – govt. should butt out; LR • Monetarism – monetary rule; rational expectations – both are classical • LR – wages adjust; GDP falls, income falls; GDP rises, income rises • Know your Phillips Curves • Get a good night’s sleep • 2 #2 pencils; pen for FRQ’s • Take your time!

  6. Rooms: • A – Fo – M1 • Fr – Lou – M2 • Low – Pi – M3 • Po – V – M4 • W – Z – F10

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