<p>use ink</p>
<p>look at collegeboard short answer grading guidelines, usually you onlyneed to hit on a key phrase or something to get it right</p>
<p>can someone answer my concept questions above?
- What exactly should we know about Keynesian theory?
- What are supply shocks?
- What’s the difference between the moneys (M1 v M2 v MZM, etc)
- Whats quantity theory?
- Whats income velocity?</p>
<p>Where it says “explain”, explain. But if it only says to indicate, you don’t need an explanation, just state the answer.</p>
<p>thanks guys! therein lies the trouble with self-studying and not having a teacher to ask. 
but I’m glad there’s CC.</p>
<p>does an increase in government spending lead to a larger money supply or does it have nothing to do with the money supply?</p>
<p>Government spending doesn’t necessarily lead to a larger money supply; the results of an increase in G would be crowding out of private investment, larger GDP, etc. The money supply, however, could grow if the Fed decreases the discount rate (the interest rate the Fed charges banks to loan money to meet reserve requirements) or if the Fed conducts an open market operation of buying government securities. The Fed could also lower the reserve requirement, hence making the money multiplier more effective in the money creation process. Note that these are all expansionary monetary policies as opposed to contractionary monetary policies (government spending is an example of discretionary fiscal policy).</p>
<p>Money multiplier = (1)/(reserve requirement)</p>
<p>Hope that helps, paki786.</p>
<p>Question 1:
An increase in Japans demand for US good would cause the value of the dollar to:</p>
<p>Answer: appreciate because japan would be buying more US dollars.</p>
<p>Why??? Explain please.</p>
<p>Question 2:
If money stock decresaes but nominal gross domestic product remain constant, which of the following has occurred?</p>
<p>Answer: income velocity of money has incresaed.</p>
<p>Why???</p>
<p>Question 1 -</p>
<p>The US Dollar would appreciate because the Japanese need more and more US Dollars to purchase the US’s exports. As the Japanese demand more US Dollars, the Dollar gains more value (“appreciates”). You can compare this question to what happens when consumer demand for a good or service increases, perhaps because of an influential medical study or advertising campaign. The consumer demand curve will shift to the right and the vertical summation of individual demand curves bid the price of the good in the upward direction. It’s the same principle for the appreciation question.</p>
<p>Question 2 -</p>
<p>Ask yourself first “what is the velocity of money?” The velocity of money is defined as the amount of times an individual dollar has “gone around” in the economy, or how many times it has been spent. The stock of money has decreased (maybe because the Fed sold government securities, raised the reserve requirement, etc.) but the nominal gross domestic product remains constant, so the only condition that would satisfy this answer is that the velocity of money has increased. Here is a tip - use the process of elimination during multiple choice as you rule out illogical answers to the question. Remember, economics is all about applying the concepts you learned to policy analysis.</p>
<p>do appreciation of the dollar and international value for dollar go hand in hand? if not, when does one raise and when does the other raise say in regard to pesos</p>
<p>appreciation of a currency is defined as the increase in the international value of it (value compared to other currencies)</p>
<p>Assume that MPC for an economy is .5. If the government decreased taxes and purchases by the same amount. Does aggregate demand change at all?</p>
<p>Yes, isn’t one more affective than the other? Like, a decrease in taxes would have more overall affect rather than being watered out by other factors? I think there was a word for it. This means since decreasing taxes has more effect, AD would rise? I’m not sure if that’s right.</p>
<p>Decreasing taxes has a lesser effect than decreasing government spending. A decrease in government spending would overall cause the AD to shift to the left more than the government decrease in taxes would cause the AD to shift to the right.
So therefore, AD would shift to the left, but just by a little.</p>
<p>OK, thanks. Would’ve gotten that one wrong.</p>
<p>^It depends on the level of tax cuts and the decrease in spending.</p>
<p>Well, it said they were equal.</p>
<p>Lol paki, if you don’t know “why” even after given the answer, you are in for a world of hurt tommorow.</p>
<p>Why doesn’t the Phillips curve work well if inflation is supply-based? Also, does the curve refer to cost-push or demand-pull inflation?</p>
<p>Oh wait, I answered my own question ha ha. It’s demand-pull because AD in excess of output causes less unemployment and greater inflation.</p>
<p>Long run Phillips Curve = Natural rate of unemployment
Movement in AD affects the Short run Phillips curve by just moving along the SRPC.
That’s about all I know about the Phillips Curve, besides drawing them of course lol.</p>