Rami’s Ap Macroeconomics Blog

Disinflation -Reduced inflation rate from year to year seen in lrpc -Occurs when ad declines Deflation -G eneral decline in the price level Hyperinflation -E conomy experiences a high and unusual rate of inflation which can decrease value of local currency Supply-side economics -C hanges in AS not AD  -Trickle-down effect -E conomists support policies that promote GDP growth by arguing that high marginal tax rates along with the current system of transfer payments (these transfer payments: unemployment compensation, welfare programs provide disincentives to work, invest, and undertake entrepreneurial ventures  -T o determine the level of inflation, unemployment rates, economic growth- aka  Reaganomics Laffer-Curve -A s tax rates increase from zero, tax revenues increase from zero to some maximum level and then decline  -D epicts theoretical relationship between tax rates and government revenue - 3 criticisms of the laffer cur...

*Absolute advantage Who can produce the same output with fewer resources -Example: papa johns can produce more pizzas than McDonald’s * Comparative advantage Who can produce the product with the lowest opportunity cost. *Means of measurement::::::: *Output :  Tons per acre, miles per gallon, words per minute, apples per tree, and computers produced per hour -When looking at an output problem, you’re looking at what they give up over what they produce *Input Number of hours to do a job, number of gallons of water to fill a pool and number of acres to feed a cow. *Balance on Goods and services Goods exports+service exports-goods imports+service imports *The formula for the balance of trade Good exports+good imports *Capital account Foreign purchase of assets+US purchases of assets *Foreign exchange Buying and selling of currency. *Appreciation A strong dollar, the dollar buys more of another currency and results ...

*The balance of payments : measures of money inflows and outflows between the US and the rest of the world. -is divided into 3 accounts Current account Capital/financial account Official reserves                                                                                                                                                                                       Inflows : known as credits, outflows are known as debits. Current account: balance/net exports -Exports-imports -Exports is credit/assets -Im...