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Ap Macro Economics Review


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Ap Macro Economics Review

  1. 1. AP Macro Economics<br />Exam Review<br />
  2. 2. Key assumptions in Economics<br />Basic Economic Vocabulary<br />Factors of Production<br />Fundamental Problem of Economics<br />Opportunity Costs<br />TINSTAAFL<br />Scarcity & Opportunity Costs<br />
  3. 3. Draw the graph<br />Efficient<br />Inefficient<br />Overextended<br />Production Possibilities Curve<br />
  4. 4. Free Market<br />Command<br />Traditional<br />Mixed<br />Economic Systems<br />
  5. 5. Absolute advantage<br />Comparative advantage<br />Be able to work problems<br />Comparative Advantage<br />
  6. 6. Law of Demand<br />Why does the law of demand exists?<br />Demand Schedule<br />T.R.I.P.E<br />Movement<br />Shift<br />Demand<br />
  7. 7. Law of Supply<br />Why does the law of supply exist?<br />Supply Schedule<br />N.I.C.E.J.A.G.<br />Movement<br />Shift<br />Supply<br />
  8. 8. Supply = Demand<br />Changes in equilibrium<br />Disequilibrium<br />What causes disequilibrium?<br />Supply & Demand Equilibrium<br />
  9. 9. Buying and selling of currency<br />Draw the graph<br />Crowding Out<br />Review power point from 2/3/10<br />Foreign Exchange<br />
  10. 10. Factor Market<br />Product Market<br />Households<br />Firms<br />Government<br />Physical Flow<br />Monetary Flow<br />Circular Flow<br />
  11. 11. Draw a business cycle<br />Peak<br />Trough<br />Recession<br />Expansion<br />How does it relate to the PPC?<br />Business Cycle<br />
  12. 12. Full Employment<br />Labor Force<br />Unemployed<br />Not in Labor Force<br />Frictional<br />Structural<br />Cyclical<br />Seasonal<br />Unemployment<br />
  13. 13. Define inflation<br />Define inflation rate<br />Measure of cost of living<br />Inflation<br />
  14. 14. Review power point from 2/16/10<br />Know how to calculate<br />CPI<br />
  15. 15. Expenditure Approach<br />Consumption (C)<br />Government Spending (G)<br />Gross Investment (Ig)<br />Net Exports (X)<br />Income Approach<br />Rent (r)<br />Wages (w)<br />Interest (i)<br />Profit (p)<br />GDP<br />
  16. 16. What is counted in GDP?<br />What is not counted in GDP?<br />Counted or Not Counted<br />
  17. 17. What’s the difference?<br />Nominal vs Real GDP<br />
  18. 18. How is it calculated? (Formula)<br />GDP Deflator<br />
  19. 19. What is the difference in Real and Nominal interest rates?<br />Real vs. Nominal Interest Rates<br />
  20. 20. DI<br />2 Choices<br />Formulas:<br />APC<br />APS<br />MPC<br />MPS<br />Consumption & Savings<br />
  21. 21. Determinates of C & S<br />
  22. 22. Savings & Borrowing<br />Draw the graph<br />What changes the demand for loanable funds?<br />What changes the supply of loanable funds?<br />Explain Crowding Out.<br />Loanable Funds Market<br />
  23. 23. What is investment?<br />Explain Rates of Return<br />Draw and explain the Investment Demand Curve<br />Shifts in Investment Demand (ID)<br />Investment Demand<br />
  24. 24. Double entry bookkeeping<br />Debit<br />Credit<br />Current Account<br />Capital/financial Account<br />Official Reserves<br />Balance of Payments<br />
  25. 25. Self Correcting Balance of Trade<br />$<br />X M<br />.:Xn<br />X M<br />.:Xn<br />$<br />
  26. 26. Formulas:<br />Spending Multiplier<br />Tax Multiplier<br />How does each multiplier affect GDP?<br />Know page 115 from Activity 21<br />Multipliers<br />
  27. 27. Define<br />Draw curve<br />Why is it downward sloping?<br />What makes AD shift?<br />Aggregate Demand<br />
  28. 28. Define<br />Draw curve<br />Explain Short Run (SRAS)<br />Explain Long Run (LRAS)<br />What shifts SRAS?<br />Aggregate Supply<br />
  29. 29. Draw the model at equilibrium<br />Explain and draw an economy in a recessionary gap<br />Explain and draw an economy in an inflationary gap<br />Most important model in economics<br />YOU MUST KNOW THIS!!!!<br />AS/AD Model<br />