Macro Semester Graph Practice Exercise
What is this graph called? / How is theY-Axislabeled? / How is the X-Axis labeled?
/ If there is a point inside the curve, it shows an economy that is ______.
It there is a point on the curve, it shows an economy that is ______.
/ This curve comparison is used to compare two country’s ______.
/ (The very basic version) / The up-sloping line is the ______.
The down-sloping line is the ______.
If the EP is increased in this market (first), it will create a ______and help the ______.
/ (Dollars) / If real interest rates go up in the USA, the ______for the dollar would ______and the dollar would ______and US exports would______.
/ (Euros….) / If Europe goes into a major expansion and all Europeans have more wealth, the ______of the Euro would ______and the Euro would ______.
/ If the Fed causes nominal interest rates to fall, the overall ______would ______.
/ (The end point of the vertical line is the ______) / The vertical line is the ______.
This economy is ______.
Which policy would target changing the C and G of the down-sloping line? ______.
Which policy would target changing the Ig of the down-sloping line? ______.
/ If major input costs of energy increased, the up-sloping line will
______and EP will ______and EQ will ______. This is known as ______.
/ (MM) = / The vertical line is controlled by the ______. When they want to help get out of a recession, they would move the vertical line ______by ______.
/ (MM) = / If Congress tries to help a recession end, they would cause the ______to move ______and the interest rates would ______.
/ (LF) / During a recession, the public will ______more and the ______line will move ______. This will cause the domestic economy to be able to ______more for investment.
/ (LF) / If Congress runs deficits, the public is buying up bonds. This means that private savings will ______and the ______will rise.
/ (PC) = / (The end point of the vertical line is the ______) / The vertical line is the ______.
If the down-sloping line has moved to the right, this will probably be due to a time of ______.
To reverse the trend, a society must improve ______.
/ (Agg.) / This series of changes illustrates the concept of ______. It is caused by a ______policy enacted by ______.
Macro Semester Graph Practice Exercise: Key
What is this graph called? / How is theY-Axislabeled? / How is the X-Axis labeled?
/ Production Possibilities
Curve / Capital Goods / Consumer Goods / If there is a point inside the curve, it shows an economy that is inefficient .
It there is a point on the curve, it shows an economy that is efficient .
/ Compar.
Advantage / (any type) / (any type) / This curve comparison is used to compare two country’s comparativeadvantage.
/ (The very basic version)
Supply and Demand / Price / Quantity / The up-sloping line is the Supply.
The down-sloping line is the Demand.
If the EP is increased in this market (first), it will create a Surplus and help the
Suppliers .
/ (Dollars)
Dollar Market / Euros
Dollars / Q dollars / If real interest rates go up in the USA, the demand for the dollar would increase and the dollar would appreciate and US exports woulddecrease.
/ (Euros….)
Euro Market / Dollars
Euros / Q euros / If Europe goes into a major expansion and all Europeans have more wealth, the supply of the Euro would increase and the Euro would depreciate.
/ Investment
Demand / Interest rates / Q Ig dollars / If the Fed causes nominal interest rates to fall, the overall gross investment would increase.
/ Aggregate Model / Price Level / rGDP
(The end point of the vertical line is the FE or Yf) / The vertical line is the
LRAS.
This economy is in recession.
Which policy would target changing the C and G of the down-sloping line? Fiscal Expansionary.
Which policy would target changing the Ig of the down-sloping line? Monetary Expansionary.
/ Aggregate
Model / Price Level / rGDP / If major input costs of energy increased, the up-sloping line will
decrease and EP will increase and EQ will decrease. This is known as Stagflation.
/ (MM) =
Money Market / (nominal) interest rates / Q money / The vertical line is controlled by the Fed. When they want to help get out of a recession, they would move the vertical line outward bybuying bonds.
/ (MM) =
Money Market / (nominal)
interest rates / Q money / If Congress tries to help a recession end, they would cause the demand to move outward and the interest rates would increase.
/ (LF) =
Loanable
Funds / (real)
interest rates / Q loanable funds / During a recession, the public will save more and the savings line will move outward. This will cause the domestic economy to be able to borrow more for investment.
/ (LF) =
Loanable
Funds / (real)
interest rates / Q loanable funds / If Congress runs deficits, the public is buying up bonds. This means that private savings will decrease and the interest rates will rise.
/ (PC) =
Phillips
Curve / inflation / unemploy.
(The end point of the vertical line is the NRU) / The vertical line is the LRPC.
If the down-sloping line has moved to the right, this will probably be due to a time of Stagflation.
To reverse the trend, a society must improve productivity.
/ (Agg.)
Aggregate
Model / PL / rGDP / This series of changes illustrates the concept of Crowding Out. It is caused by a Fiscal policy enacted by Congress.