1. AP Macro Economics Exam Review

2. Key assumptions in Economics Basic Economic Vocabulary Factors of Production Fundamental Problem of Economics Opportunity Costs TINSTAAFL Scarcity & Opportunity Costs

3. Draw the graph Efficient Inefficient Overextended Production Possibilities Curve

4. Free Market Command Traditional Mixed Economic Systems

5. Absolute advantage Comparative advantage Be able to work problems Comparative Advantage

6. Law of Demand Why does the law of demand exists? Demand Schedule T.R.I.P.E Movement Shift Demand

7. Law of Supply Why does the law of supply exist? Supply Schedule N.I.C.E.J.A.G. Movement Shift Supply

8. Supply = Demand Changes in equilibrium Disequilibrium What causes disequilibrium? Supply & Demand Equilibrium

9. Buying and selling of currency Draw the graph Crowding Out Review power point from 2/3/10 Foreign Exchange

10. Factor Market Product Market Households Firms Government Physical Flow Monetary Flow Circular Flow

11. Draw a business cycle Peak Trough Recession Expansion How does it relate to the PPC? Business Cycle

12. Full Employment Labor Force Unemployed Not in Labor Force Frictional Structural Cyclical Seasonal Unemployment

13. Define inflation Define inflation rate Measure of cost of living Inflation

14. Review power point from 2/16/10 Know how to calculate CPI

15. Expenditure Approach Consumption (C) Government Spending (G) Gross Investment (Ig) Net Exports (X) Income Approach Rent (r) Wages (w) Interest (i) Profit (p) GDP

16. What is counted in GDP? What is not counted in GDP? Counted or Not Counted

17. What’s the difference? Nominal vs Real GDP

18. How is it calculated? (Formula) GDP Deflator

19. What is the difference in Real and Nominal interest rates? Real vs. Nominal Interest Rates

20. DI 2 Choices Formulas: APC APS MPC MPS Consumption & Savings

21. Determinates of C & S

22. Savings & Borrowing Draw the graph What changes the demand for loanable funds? What changes the supply of loanable funds? Explain Crowding Out. Loanable Funds Market

23. What is investment? Explain Rates of Return Draw and explain the Investment Demand Curve Shifts in Investment Demand (ID) Investment Demand

24. Double entry bookkeeping Debit Credit Current Account Capital/financial Account Official Reserves Balance of Payments

25. Self Correcting Balance of Trade $ X M .:Xn X M .:Xn $

26. Formulas: Spending Multiplier Tax Multiplier How does each multiplier affect GDP? Know page 115 from Activity 21 Multipliers

27. Define Draw curve Why is it downward sloping? What makes AD shift? Aggregate Demand

28. Define Draw curve Explain Short Run (SRAS) Explain Long Run (LRAS) What shifts SRAS? Aggregate Supply

29. Draw the model at equilibrium Explain and draw an economy in a recessionary gap Explain and draw an economy in an inflationary gap Most important model in economics YOU MUST KNOW THIS!!!! AS/AD Model