Macro cue card by Sally Dickson, Austin, TX., [email protected]

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Transcript Macro cue card by Sally Dickson, Austin, TX., [email protected]

cue card
by Sally Dickson, Austin, TX., [email protected]
IX. FRQ Index by Topic (Textbooks and study guides have questions on all topics.)
Alphabetical Meaning of Symbols
Macro Free Response Question CUE CARD - 2005
Part III: Monetary Policy – by Federal Reserve’s FOMC
Part IV: International Trade.[Compare USA to ROW-Rest Of the World]
1. _____________________
Who conducts Fiscal Policy?
Tax (“T”)
2. ____________________(1)
What are the two tools of Fiscal Policy?
Gov. Spending (“G”)
3. ____________________
Does Fiscal Policy aim to shift AS, AD, or both?
4. ____________________
Inflationary problems require which type of
Fiscal Policy?
Unemployment and recessionary problems
require which type of Fiscal Policy?
If we have stagflation, where does AD cross AS?
5. ____________________
Below FE, in the
Keynesian range
6. ____________________
DLF [Mankiw says SLF]
7. ____________________
Price of bonds fall
8. ____________________
Crowding-out effect
9. ____________________
G borrowing leads increase
LFM, leads to increase in r.
10. ___________________(1)
GDPN incr. leads increase in
Dm(MD) leads incr. i (2)
Does Fiscal Policy affect Demand or Supply of
Loanable Funds?
What happens to the Price of Bonds when
interest Rates increase?
The effect on business borrowing that occurs
when the federal government borrows is called?
Two reasons expansionary Fiscal Policy might
cause interest rates to rise are what?
Federal Reserve
11. The
Who conducts Monetary Policy?
12. ___________________(1)
What are the three tools of Monetary Policy?
Reserve Requirement
Discount Rate (3)
13. ___________________
Tight (Contraction)
14. ___________________
15. Easy
Sm (MS)
16. ___________________
17. ___________________
Increase supply of loans,
In MS, increases i
Interest rates increase,
decrease Ig
19. ___________________
At higher interest rate,
Ig projects profitable
Does Monetary Policy mainly affect AS, AD,
or both?
If inflation is the problem, what type of Monetary
Policy is needed?
If unemployment & recession are the problems,
what type of Monetary Policy is needed?
Does Monetary Policy affect Demand or Supply
of Money?
Which group makes Monetary Policy decisions?
What happens if Excess Reserves increase in
the banking system?
What happens to business investment if interest
rates increase?
Why does this (#19) happen?
is a component of AD
M increase
22. ___________________
Because Americans have more
income to spend on both
Why does Aggregate Demand decrease in this
situation? (#19-20)
If real GDP in the US increases, how does this
affect US imports?
and foreign goods
Why? (see #22)
M decreases
24. ___________________
What happens to US imports from China if they
experience inflation?
Why? (see #24)
Because their products
cost more, we buy less.
25. ___________________
of $’s increase
for $’s decrease
When U.S. investors buy European
assets, they supply $’s in FEX.
Foreign investors buy more
European assets and fewer U.S.
so demand for $ declines.
price per dollar increases
If real interest rates in Europe rose relative to
ours, what would happen to the (1) supply of US
dollars and (2)
demand for US dollars in the foreign exchange
Why do both curves shift? (see #26-27)
Interpret this script into plain English: ¥P/$↑.
PPC shifts out
30. ___________________(1)
shifts out to right
If Ig is less than depreciation
in SR, capital stock shrinks.
32. ___________________
All human-made resources
of a nation
33. ___________________
They are parallel
34. ___________________
35. ___________________
36. ___________________
Wage contracts
37. ___________________
rate of unemployment
What are two ways to show “economic growth”
on graphs?
If investment in real capital declines
significantly in the short run, what will happen
to the “stock of capital” in the long run?
To what do the words “stock of capital” refer?
Looking at the graph, how do we know that the
long run Phillip’s Curve is not related to
Is the short run Phillips curve related most to
the short run AS curve or the AD Curve?
Are points on the short run Phillips curve
related most to short run AS or AD?
Why might nominal wages not respond to a
changing inflation rate in the short run?
What is another name one might give to the 5%
Unemployment of the Long Run Phillip’s Curve?