<p>I believe the PPF must be curved.</p>
<p>^No. It should be curved due to the law of increasing opportunity cost and because between two things resources are completely interchangeable, but on the AP test you can draw a straight line for PPF, a curved line just looks nicer, but it is not necessary.</p>
<p>EDIT:Unless of course the problem states that it can’t be completely interchanged, or there is law of increasing opportunity cost.</p>
<p>PPF is curved when you have a linear change-off between goods, i.e. you give up exactly one pound of butter and receive exactly one gun. My textbook explained that the PPC curve is rounded because of the law of diminishing returns–as you locate more resources away from something the less you are bound to reap of it. A good example that I read was of a farmer who could pick either apples or oranges, and that as he re-allocated his resources (i.e. workers) away from picking oranges, he gained a lot in the initial stages because the apples were lower and easier to pick. After this beginning, it becomes harder and harder as the workers will need to reach higher and work harder to obtain them. I’m pretty sure the AP test wouldn’t test on this (they usually provide the PPC curves, which are simplified straight lines), more likely to test on comparative advantage and trading terms.</p>
<p>And I would say that AD/AS curves are usually curved just to differentiate from the normal D/S curve, but the graders won’t care just as long as you label your axes correctly (x-axis: real GDP, real output, etc., y-axis: overall price level, prices, etc.).</p>
<p>hum, i’m looking over all of this, and all i remember is SPICE-T and CoGENT for shifters and that keynesian meant sticky prices. </p>
<p>i’m surprised that you’re all going into so much detail-- i just went into last year with crude ideas and figured stuff out on the test, and i’m pretty sure i learned more from taking the test than from listening in class.</p>
<p>** those shifters are for micro too, aren’t they? too bad i forgot what they stood for, maybe substitute, population, i…hum…compliment, e… hum…taste. O:-)</p>
<p>Does knowing Micro really well help somewhat with Macro?
Also, if you’ve taken Gov. will that help?
I’m not finding it very difficult yet, although, I procrastinated way too much on studying. But I guess I have the excuse of having been sick…</p>
<p>Does anyone know about how much one needs on the MC to get a five (or the likelihood of getting a five)? How is the curve?</p>
<p>@ Shizzle: “Does knowing Micro really well help somewhat with Macro?”</p>
<p>Of course! All the basic demand and supply stuff is basically the same as macro, so that helps when you learn about macro.</p>
<p>shen0211 - well what score did you get with your preparation?</p>
<p>Anyway, I just took the practice exam in the back of my Princeton Review book and beasted it (5 wrong out of 60 on the multiple choice for a raw score of 53.75, and essentially maybe 1-2 points off out of 27 on the FRQs… idk it’s kinda hard to self-grade).
Hopefully the PR practice exams aren’t notoriously easy or anything right?
And does anyone have a chart that shows what combination of MC and FRQ scores you need to likely get a 5, 4, etc?</p>
<p>I would say Micro is like 25% of the Macro exam. haha</p>
<p>i need to review a lot</p>
<p>especially foreign exchange</p>
<p>crowding out</p>
<p>market for loanable funds</p>
<p>that interest rate graph</p>
<p>lol</p>
<p>Someone explain crowding out</p>
<p>please?</p>
<p>govt increases spending, increases money demand, increases interest rates, decreases investment, decreases AD.</p>
<p>^exactly!</p>
<p>loanable funds is essentially like the amount of money available to loan out (no need to overcomplicate things). So if there is a greater demand for loanable funds, interest rates will rise, but if supply increases. Its just a supply and demand relationship with loans rather than shoes.</p>
<p>This is my last AP test ever!!! Yes.
Need to start studying. The test shouldn’t be that hard. 
All it is is AD/AS xD</p>
<p>Hey there,</p>
<p>Does anyone have a quick and simple way of determining terms of trade? I’m trying to look it up but I’m not getting straight answers~</p>
<p>haha tan2007, that’s basically the only thing I don’t really know either. Like, there has to be a comparative advantage for both partners I guess? Hopefully they don’t do a FRQ on that…</p>
<p>Well I understand which country would be exporting and would be importing based on the lower opportunity cost, i.e. comparative advantage, I just don’t know how terms of trade would affect this…</p>
<p>EDIT: Okay, I think I understand it now. Here are a few steps I’ve mapped out to finding comparative advantage and whether terms of trade are beneficial to a country:</p>
<ol>
<li>Assemble the table properly (they’ll probably give you a graph), with two goods (it’s always two, never more) in their respective places against the two countries. For example (from the 2008 FRQ):</li>
</ol>
<p>_______<em>__Hats</em><em>|</em>Bicycles
Artland <strong><em>600</em></strong><strong><em>300
Rayland</em></strong>1200_____300</p>
<p>(sorry… had to use _ instead of spaces because it wouldn’t line up properly. This is just a 2x2 table :S)</p>
<ol>
<li><p>Calculate opportunity cost for each good by taking the <em>opposite</em> or <em>other</em> good and then divide it by the good you’re trying to find the opportunity cost for, i.e. Artland’s opportunity cost for bicycles= 600 hats/300 bikes= 1 hat/2 bikes.</p></li>
<li><p>Make a new table for opportunity costs. From our example:</p></li>
</ol>
<p>_____<em>Hats</em><em>|</em><em>Bicycles
Artland</em><strong>1/2</strong><strong><em>2
Rayland</em></strong>1/4_______4</p>
<ol>
<li><p>Decide which country has comparative advantage for each good by simply circling the one with the lower opp. cost–in this example, Rayland has the comp. advantage in hats and Artland has the comp. advantage in bicycles. REMEMBER that if a country has a comp. advantage in a good, it will export it and then the other country will import that good, i.e. Rayland will export hats to Artland and Artland will export bicycles to Rayland.</p></li>
<li><p>NOW, for terms of trade! The basic and easiest rule to learn is that if the terms of trade are in between your opp. costs from the comp. advantages, in this case 1/4 to 2, then <em>both</em> countries will benefit from the trade. Therefore, if the they decided to trade 1 bike for 1 hat, both would trade for the simple reason that they are now able to produce outside of their production possibilities curve (sometimes the FRQ will ask you to explain). Any terms of trade in between 1/4 to 2 will benefit both.</p></li>
</ol>
<p>And for this particular question, it asked whether the terms of trade 5 bikes to 1 hat would benefit Artland or Rayland. Now, from the last point, we definitely know that both are NOT benefiting from this trade because it is outside of 1/4 to 2. To decide which one is benefiting, simply look at whether or not the terms of trade they are giving you are greater than that country’s opp. cost. </p>
<p>In this case, 5 is greater than 2, so Artland is benefiting because it is now able to produce outside of its PPC curve. This trade is NOT advantageous for Rayland because 1/5 is lower than 1/4, meaning that it receives less from the trade and is actually producing inside of its PPC curve—not good.</p>
<p>I hope that helps! =P</p>
<p>does anyone know of a good site that explains fiscal and monetary policy really well?</p>
<p>this test is going to be pwned.</p>