2010 AP Macroeconomic Exam (BOP) Multiple Choice

2010 AP Macroeconomic Exam (BOP) Multiple Choice

Balance of Payments

Answer (D) a us firm sells $500 million of its products to a Chinese Company.

Welker

2010 AP Macroeconomics Exam (Growth) Multiple Choice

2010 AP Macroeconomics Exam (Growth) Multiple Choice

Answer (E) a sustained increase in RGDP per capita.

Answer (B) with long run economic growth, there is an increase in aggregate supply

Answer (E) Technological Progress

Answer (D) the training and education of workers

Mr Clifford doing his thing.

Forex, Growth, BOP, Cheat Sheet

Forex Cheat Sheet - Growth - BOP

Balance of Payments

So, this is a start on a cheat sheet for the FOREX section of the AP exam.

RIR = Real Interest Rate (Loanable Funds)
PL = Price Level (think, Inflation/Deflation)
MS = Money Supply
SLF  = Supply of Loanable Funds
DLF  = Demand for Loanable Funds
GS = Government Spending
$ = US Dollar

The Multiple choice section of the Macro AP exam has covered all of the below. You must also understand the other side of these interactions. If the demand for the $ decreases then the demand for the Peso/Euro must have increased, relatively. Do not memorize these interactions, write them out with words to make sure the causal effects are understood.

Ex. US imports are increasing - US citizens are buying more Chinese goods - to buy Chinese goods the Americans are exchanging dollars for yuan - the supply of dollars is increasing in the foreign exchange market - if supply increases then the value of the dollar will fall, relative to the yuan's value.  

2010 AP Macro Exam (FOREX) Multiple Choice

2010 AP Macro Exam (FOREX) Multiple Choice

Answer (B)

Answer (A)

Answer (B)

Answer (A)

Answer (A)

Answer (D)

2010 AP Macro Exam Multiple Choice (PPC, Comparative Advantage, Circular Flow)

2010 AP Macro Exam Multiple Choice 
(PPC, Comparative Advantage, Circular Flow)

Answer (C) Countries X & Y can engage in mutually advantageous trade by exchanging 1 watch for 1 radio.

Answer (D) 10

Opportunity cost,, what is given up - to move from 10 to 20 (A) is a gain of 10.

to move from 90 to 80 (B) is a loss of ten.

Lose 10 units of (B) and gain 10 units of (A)

Answer (A) Households are on the demand side of the product market and the supply side of the resource market.

Fiscal Policy Cheat Sheet

Fiscal Policy Cheat Sheet

This is a tentative cheat sheet,, I will be working my way over the next week through the FRQ's and Multiple choice questions to check my thinking.

Questions, comments, corrections -    wcwaugh@gmail.com

Government Spending & Taxes and Real Interest Rates

Government Spending and Real Interest Rates

If the Government is spending then the Real Interest rate is increasing.

FRQ's that ask about government spending always want to know the real interest rate. The loanable funds graph tell you whether the real interest rate is rising or falling.

Hint, if the government is spending the RIR is increasing.

Remember that Keynesian view spending is a short-term fix for a recession.
When the RIR increases, investment is reduced and growth is sacrificed and there will be less capital investment.

As for the decrease in taxes being expansionary. Take the view that with a balanced budget when the government reduces taxes it must make up the difference with Government spending.
The reasoning is a bit circular because the idea of a reduction in government is not entertained along with the reduction in taxes.

More about crowding out, soon.