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AP Economics

AP Economics. Mr. Bernstein Macro Graphs Review May 2014. AP Economics Mr. Bernstein. The Production Possibilities Curve. AP Economics Mr. Bernstein. Economic Growth Concave due to “Law of increasing opportunity costs”. AP Economics Mr. Bernstein. Circular Flow Diagram.

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AP Economics

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  1. AP Economics Mr. Bernstein Macro Graphs Review May 2014

  2. AP EconomicsMr. Bernstein The Production Possibilities Curve

  3. AP EconomicsMr. Bernstein Economic Growth • Concave due to “Law of increasing opportunity costs”

  4. AP EconomicsMr. Bernstein Circular Flow Diagram

  5. AP EconomicsMr. Bernstein Expanded Circular Flow Diagram

  6. AP EconomicsMr. Bernstein Factors Influencing Investment Spending • Reduction in Real Interest Rates increases investment demand • Increase in Expected Future GDP or in Production Capacity shifts demand curve

  7. AP EconomicsMr. Bernstein Money Market • Assumes fixed MS; Y axis is Nominal Rates

  8. AP EconomicsMr. Bernstein Loanable Funds Market • Supply is upward sloping; Y axis is Real Rates

  9. AP EconomicsMr. Bernstein Contractionary Monetary Policy and Rates • Fed sells securities, rates rise

  10. AP EconomicsMr. Bernstein Contractionary Monetary Policy & the Economy • Increases in rates leads to decrease in Investment, AD

  11. AP EconomicsMr. Bernstein Long-Run Macroeconomic Equilibrium • Returns to LRAS via shift in SRAS

  12. AP EconomicsMr. Bernstein Short-Run and Long-Run Effects of Increase in MS • Short-run shift in AD offset by shift in SRAS • LRAS does not shift; only P increases

  13. AP EconomicsMr. Bernstein Short-Run Phillips Curve • Tradeoff between inflation and unemployment

  14. AP EconomicsMr. Bernstein Long-Run Phillips Curve • LRPC = Natural Rate of Unemployment

  15. AP EconomicsMr. Bernstein Exchange Rates • Labeling: think “bottom/bottom”

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