1. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 GRAPHS 2 KNOW FOR THE AP MACRO EXAMINATION Mr. Redelsheimer AP Macroeconomics 2007-2008
2. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Q Q Robots (thousands) Pizzas (thousands) 14 13 12 11 10 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 A B C D E W Attainable but Inefficient Unattainable Attainable & Efficient PRODUCTION POSSIBILITIES
3.
4. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Price Level Real Domestic Output, GDP Q P AS AD AGGREGATE DEMAND / AGGREGATE SUPPLY Equilibrium Real Output Y P
5. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Price Level Real Domestic Output, GDP Q P AS AD AS/AD: Recession Equilibrium Real Output AS LR Long Run Aggregate Supply (Full Employment) Y P
6. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Price Level Real Domestic Output, GDP Q P AS AD AS/AD: Inflation: Beyond Full Employment Equilibrium Real Output AS LR Long Run Aggregate Supply (Full Employment) Y f Y 1 P
7. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Price Level Real Domestic Output, GDP Q P AS AD 1 INCREASES IN AD: DEMAND-PULL INFLATION P 2 P 1 AD 2 Yf Y1
8. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Price Level Real Domestic Output, GDP Q P AS 1 AD 1 DECREASES IN AS: COST-PUSH INFLATION P 2 Y 1 Y 2 AS 2 P 1
9.
10.
11.
12. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Real Interest Rate, r Quantity of Loanable Funds LOANABLE FUNDS MARKET r D Q S This graph shows how the supply and demand for loanable funds affects real interest rates!
13.
14. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 The Market for Yen Quantity of Yen Dollar Price of 1 Yen 0 P Q Q e S y D y THE FOREIGN EXCHANGE MARKET
15. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 P Q Dy Sy Dollar price of one Yen Quantity of Yen 3 2 1 Dollar depreciates Dollar appreciates The Market for Yen THE FOREIGN EXCHANGE MARKET
16. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Annual rate of inflation (percent) Unemployment rate (percent) 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 As inflation declines... THE PHILLIPS CURVE CONCEPT unemployment increases And vice versa! SRPC
17. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 Annual rate of inflation (percent) Unemployment rate (percent) 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 THE PHILLIPS CURVE CONCEPT SRPC 1 LRPC = Is the natural Rate of Unemployment SRPC 2 With Stagflation, Shift SRPC to the right With AD shift, move along existing SRPC
18.
19. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 TWO WAYS TO SHOW ECONOMIC GROWTH A B C D Capital Goods Consumer Goods Price Level Real GDP AS LR1 AS LR2 Q 1 Q 2
20.
21. “ Redelsheimer’s Graphs to Know” AP Macro Review Copyright 2005 BUSINESSES HOUSEHOLDS RESOURCES INPUTS $ COSTS $ INCOMES PRODUCT MARKET GOODS & SERVICES GOODS & SERVICES $ CONSUMPTION $ REVENUE GOVERNMENT RESOURCE MARKET Circular Flow Model
