PPC: Showing Opportunity Costs

Let's start at the very beginning
A very good place to start
When you read, you begin with ABC
When you sing you begin with do re mi
Do re mi
The first three notes just happen to be
Do re mi, do re mi

The very beginning for AP Macro is the PPC. The curve is a visual of the basic assumptions and vocabulary of economics - scarcity and opportunity cost. When reviewing and working through problems, if you need a quick refresher on how to draw, read, and change the curve refer to the video below.

AP Macro Final

For your AP Macro final exam, I need your honest opinion to help me be a better teacher. Complete the following survey - completion of this will count as your final!

AP Macro Final

Closing In On May 15

We are getting close, less than a month away.

8am May 15 - AP Macroeconomics Test

That date will not change.

That is the date we have been working toward all semester. That is the date you have the opportunity to make everything we have been through (all the FRQs, those past and yet to come, the test corrections, the bad jokes) worth it.

For you to get the most out of that date, you need to take responsibility for your preparedness (not sure that's a word or not). Study. Break up your notes into small chunks. Know the graphs!! They are the key to understanding and mastering the course.

Investment Demand

Here is the video over the investment demand graph ...

Remember - The investment demand graph is for BUSINESS SPENDING, which is businesses borrowing for capital investment. This means they will BORROW money to invest, so interest rates are the COST of investment. 

FOREX Graph

Here is the review video for the FOREX graphs

Loanable Funds and Money Market Graphs

Here are the two latest videos on graphing - Loanable Funds and Money Market

1. Loanable Funds Graph

2. Money Market

Loanable Funds and Money Market Practice

Here are a few practice problems for tomorrows quiz

2005 #1

1.       Assume that declining stock market prices in the United States cause many United States financial investors to sell their stocks and increase their money holdings.

a.       Draw a correctly labeled graph of the money market and show the impact of the financial investors’ actions on each of the following.

                                                               i.      Demand for money

                                                             ii.      Nominal interest rate

2010 #2

2.       A drop in credit card fees causes people to use credit cards more often for transactions and demand less money.

a.       Using a correctly labeled graph of the money market, show how the nominal interest rate will be affected.

2007 Form B #2

2.        

a.       Assume that businesses are granted a tax credit on spending for machinery. Using a correctly labeled graph of the loanable funds market, show the effect of the business sector’s response on the real interest rate.

b.      Now assume instead that the tax rate on interest income from household savings is lowered and there is no change in government budget deficit.  Using a second labeled graph of the loanable funds market, show the effect of the households’ response on the real interest rate.

2005 Form B #3

3.       Assume that an increase in government spending increases the budget deficit in Country A.

a.       Using a correctly labeled graph of the loanable funds market, show the effect of the increase in Country A’s budget deficit on the real interest rate.