<p>The monetarists also believe that the Fed should increase the money supply every year by an amount proportional to the increase in GDP.</p>
<p>An increase in AS will cause income and employment to change in what way?</p>
<p>I know Price level will decrease and GDP will increase according to the AS/AD model…so because prices are higher, incomes need to increase? which will lead to more employment?</p>
<p>correct?</p>
<p>What is the difference between allocative, productive, and distributive efficiencies?</p>
<p>When AS shifts out, price levels decrease and unemployment levels decrease. We are making more.</p>
<p>hey if anybody is already prepared for the test or is willing to help me out, could someone chat with me on AIM? I have some concept questions i need answers to…</p>
<p>Sure. What’s your AIM?</p>
<p>hey, i’ll chat with you too what’s you aim?</p>
<p>thanks…its coketastesgood34</p>
<p>ok time to start an AIM chat room for MACRO!!</p>
<p>someone set it up!</p>
<p>Actually if anyone wants to chat it up, aim:gochat?roomname=macroeconAP&Exchange=5</p>
<p>i’ll do it…called apmacro</p>
<p>or rather,
aim:gochat?roomname=APMacro&Exchange=5</p>
<p>2005 AP Macroeconomics Grading Chart:
71-90 = 5
53-70 = 4
43-52 = 3
31-42 = 2
0-30 = 1</p>
<p>MC: Number correct - (.25*Number wrong) = Raw MC score
FRQ:
Question 1 = Number out of 13 * 1.1538 =
Question 2 = Number out of 8 * .9375 =
Question 3 = Number out of 6 * 1.25 =</p>
<p>Composite Score: MC Raw Score + Total FRQ score = Composite</p>
<ol>
<li>If the nominal interest rate increases from 5% to 7% and the consumer price index increases from 2% to 3%, then the:</li>
</ol>
<p>(A) new lenders are hurt.
(B) real interest rates increase. (C) real interest rates decrease.
(D) borrowers are better off.
(E) real interest rates remain constant.</p>
<ol>
<li>Which of the following best explains when a $10 billion increase in government purchases would not have a greater short-run expansionary affect than a $10 billion decrease in taxes?</li>
</ol>
<p>(A) The marginal propensity to consume is 1.
(B) The marginal propensity to consume is less than 1.
(C) The marginal propensity to save greater than 0.
(D) The marginal propensity to save is less than 1.
(E) The marginal propensity to consume is equal to the marginal propensity to save.</p>
<p>Delta Y = 1/MPS * Delta G
Delta Y = MPC/MPS * -Delta T</p>
<p>MPS + MPC = 1</p>
<p>Thus if you want taxes to have the same or a greater effect, the MPS cannot be < 1, as taxes will have less effect (smaller number being divided by same number). Same goes for MPC. MPS can’t equal MPC, then they’d both be .5, G would still have a greater effect. If MPS>0, same thing, taxes would have less effect. Only way they have the same effect is if MPS = 0, which means MPS1.</p>
<p>(A)</p>
<p>thank you so much!</p>
<ol>
<li>blahhh</li>
</ol>
<ol>
<li>C</li>
<li>A</li>
</ol>
<p>i think 25 is b?
nominal interest rate = real interest rate + inflation rate.
real interest rate went from 3 to 4?</p>