<p>federal funds rate. </p>
<p>Well, you only need ~68 on micro and ~65 on macro for a 5 so a 50/60 sets you up pretty nicely for a 5 since the FRQs are rather simple relative to the MC.</p>
<p>The curve is so scary…</p>
<p>^^ I heard the cutoffs for both were around 72</p>
<p>I agree. Most tests aren’t curved that low</p>
<p>That’s not what princeton review claims. Essentially, one could get a 43/60 on the macro MC and a 22/30 on the FRQs and get a 5.</p>
<p>Most tests have curves where a 5 is <65%.</p>
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<p>we must assume that wages are sticky? I mean in reality, wages are probably more flexible than Keynesians would like to assert, but we’ll have to suscribe to strict Keynesian credence regarding wages?</p>
<p>^ Wages are definitely more flexible than a strict Keynesian would claim, but it’s almost universally accepted (across all economic schools of thought) that there exists a certain “lag time” in which changes in wages are not proportionate to the change in inflation levels.</p>
<p>I probably should have omitted the sticky wages part, seeing as I doubt Macro will test it. For tomorrow’s test, just know that inflation will cause real wages to fall in the short run.</p>
<p>According to 5 steps, an increase in the demand for US treasury bonds would decrease demand in the money market, lower the interest rate, and depreciate the dollar. I get the last two points… but why doesn’t the deamand in the money market increase instead of decreasing?</p>
<p>Is it just me or are Micro Free Response in Princeton Review really, really easy…?</p>
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An increased demand for Treasury Bonds basically implies the preference of holding bonds over currency.</p>
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I wouldn’t suggest studying PR FRQ. Just look at the released FRQ on the College Board site.</p>
<p>I still can’t believe that the money supply will increase when banks create money. If that’s true, then the money supply must be constantly increasing into astronomical amounts.</p>
<p>I mean, when banks loan money to other banks, all they’re doing is extending a line of credit. While I understand that loans show up in the new banks as check-deposits, it’s obvious that the money can be destroyed when loans are inevitably repaid. </p>
<p>Will someone please clear that up?</p>
<p>I found it hard and not at all similar to actual AP exams</p>
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<p>Alternatively, an increase in the demand for bonds must mean that the interest rate has gone up. Interest rate up = leftward movement along the money market demand curve.
Which will then lower the interest rate… why do we even bother with economies in disequilibrium?</p>
<p>Also, would someone please explain what the balanced-budget multiplier is for if it doesn’t affect or incite calculations
?
Intuitively, a coordinated movement of G and T in the same direction’s effect on AD would depend on the magnitudes of the shifts of G and T, or am I completely wrong again?</p>
<p>What do we have to know regarding fixed, flexible, and managed exchange rates? </p>
<p>Also, what happens when people want to hold more currency rather than stocks and bonds?</p>
<p>@antonio: I’m not certain whether I fully comprehended your statement, but the balanced-budget multiplier is in effect whenever there is a movement in G and T in opposite directions (i.e., contractionary for one and expansionary for the other). For instance, an increase in both by $100 and an MPS of .2 would cause there to be a spending multiplier of 5 and a tax multiplier of -4, meaning that AD would shift $500 to the right and $400 to the left, leaving it $100 to the right of its original position. Since the tax multiplier is always one less than the spending multiplier, the balanced budget multiplier is always 1.</p>
<p>Consumption goes up. People don’t just stuff money under their beds in lieu of placing them in banks. </p>
<p>The government might have trouble financing its deficit if bond demand drops universally. That, in turn, can cause the normal repercussions associated with deficits.</p>
<p>The demand of stocks has almost nothing to do with anything in the economy as a whole; the stock exchange is essentially an exchange of bits of paper.</p>
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<p>Oh really? I never worked it out mathematically.</p>
<p>What if we increased spending by $500 and taxes by $300? What kind of effect will that have? </p>
<p>Also, do we just assume that the govt will choose whatever rate necessary to generate an additional $300 dollars and skip the calculations at that step?</p>
<p>I normally get 45/60 raw score for MC, will this get me a five?</p>
<p>^ That’s probably a high 4/extremely low 5 depending on your FRQ</p>
<p>If it’s macro and you get the same % score on the FRQs then you get a 5, if it’s micro you prolly get a 4.</p>
<p>Just work it out mathematically antonio. (500 X spending multiplier) + (300 X tax multiplier). Don’t worry about that for tomorrow, though. I doubt that they will ask something like that.</p>
<p>No one would happen to be able to answer my questions right…? =/</p>
<p><a href=“Supporting Students from Day One to Exam Day – AP Central | College Board”>Supporting Students from Day One to Exam Day – AP Central | College Board; - How do you solve #19 on macro?</p>