Households provide workers to firms - Firms provide paychecks to households Circular Flow: Households and Firms What is and isn't included in GDP? How do discouraged workers impact the unemployment rate? Business Cycle: Where is NRU found?

Circular Flow: Households and Firms

Borrowers with fixed interest rates are better off because their money is worth less than when they originally took out the loan - For lenders, this is unfortunate because they are making less than they anticipated Main cause of hyperinflation: Why are borrowers w/fixed interest rates better off then lenders when there is unanticipated inflation? How do banks make money? What increases a nation's debt?

Why are borrowers w/fixed interest rates better off then lenders when there is unanticipated inflation?

The NRU is found on the straight line that is between the peaks and troughs How is AD measured? Business Cycle: Where is NRU found? Main cause of hyperinflation: What is and isn't included in GDP?

Business Cycle: Where is NRU found?

A nation's debt increases when spending increases - Also with tax cuts, stimulus programs, and decreased tax revenue (unemployment) What are automatic stabilizers and what do they do to AD? What is and isn't included in GDP? What increases a nation's debt? How do banks make money?

What increases a nation's debt?

AP Final Macroeconomics Exam

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Households provide workers to firms - Firms provide paychecks to households

An increase in the money supply

Borrowers with fixed interest rates are better off because their money is worth less than when they originally took out the loan - For lenders, this is unfortunate because they are making less than they anticipated

The NRU is found on the straight line that is between the peaks and troughs

All goods and services (real GDP) that buyers are willing and able to purchase at different price levels - the demand for everything by everyone in the US - there is an inverse relationship between price level and real GDP

Included: C- consumption I- business investment G- government spending (X-M)- net exports Not Included: - Nonmarket Activities (cooking your own food) - Underground Economy (drug deals) - Negative externalities (clean-up efforts of pollution are counted, making it seem like disasters benefitted economy) - Quality of life (doesn't tell us who is getting that well-being)

Frictional: in between jobs/part-time job Structural: skills are no longer in use; technology replaced workers in a specific job Cyclical: least common; caused by recession

A nation's debt increases when spending increases - Also with tax cuts, stimulus programs, and decreased tax revenue (unemployment)

On the PPC: the economy is efficiently using their resources Under the PPC: inefficiency Above the PPC: impossible/unattainable

Automatic Stabilizers - Any part of the government budget that offsets fluctuations in aggregate demand without any intervention by the government or policymakers - In a recession, automatic stabilizers work to increase AD by taxing automatically reducing, raising expenditures and pulling the economy out of recession, up to LRAS - In an inflationary period, automatic stabilizers work to decrease AD by increasing taxation automatically, lowering expenditures and pulling the economy back towards the LRAS

The interest rates that banks charge one another for one-day loans of reserves (banks decide on their own)

-Commercial banks make money on the interest rates on loans they give out - Banks also make money through the federal funds rate, or the interest they charge other banks to borrow money from them over night

Each country can make their item at a lower opportunity cost than the other - They then trade these items at maximum efficiency, saving time and resources - Trade ultimately contributes to global efficiency

Educated workers can efficiently carry out tasks and increase productivity

Opportunity Cost = Return on Most Profitable Investment Choice - Return on Investment Chosen to Pursue

Discouraged workers don't count towards the unemployment rate because they stopped looking for jobs

The money supply will increase - BUY BIG

A fall in the value of a currency in terms of its exchange rate versus other currencies - Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability, or risk aversion among investors

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AP Final Macroeconomics Exam

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