<p>Yep, increased demand for currency leads to appreciation. That was the easiest FR of all my exams (even Psych). All of us finished the FR within the 10 minute reading period then spent the rest of the time making the graphs pretty. =) Our teacher drilled us on FR (like 5 a class). Worth it in the end..</p>
<p>um when you increase the interest rate for a country, what happens in its exchange market and with exports</p>
<p>It increases the "financial" capital from other country that flows in and decreases the exports.</p>
<p>But I don't think that was a question asked on the FR - wasn't it like something with "demand for the currency in foreign exchange market" and "value of the currency"? or something? Ergh. It's all blurry in my mind.</p>
<p>Countries desire to import from countries with low relative interest rates (like the US importing goods from China). To my teacher's credit, we really worked on the affects of gov. spending on interest rates (crowding out) for the last month, so that question was simple. I understand the phillips curve theory perfectly, but I don't think we ever wrote one the entire year. He just told us we needed to know what a phillips curve was :(</p>
<p>one of my FR things was that the government would buy bonds, increase currency and lower interest rates, and then increase exports by depreciating the dollar (I think it was for that Japan one, its all actually a blur)</p>
<p>the LR philly curve is the straight line, isn't it?</p>
<p>I was wondering about staglation, since its a production-pull inflation that increases both variables on the philly curve, but i ignored that lol</p>
<p>I remember the FR thing was like "What open-market operations would the government undertake" or something...since it is "open-market," it means that it's fiscal policy, not monetary, that's why I didn't put increasing the money supply, because increasing the money supply is actually a monetary thing. So for that all I put was that the government would "buy bonds." I think I also took into account that Japan was in a recession, therefore the government can't necessarily stimulate their demand for US goods by depreciating our dollar, therefore, the only solution was to increase government spending and stimulate investment spending to push the expenditures/demand curve back into its original eq. spot. </p>
<p>The LR Phillips curve is a straight line at five percent.</p>
<p>i think thats what i did, i'm confused as to what the difference between fiscal and monetary is, but doesn't matter now</p>
<p>I knew it was either buying or selling securities, but Im not sure what I ended up putting, lol. :)</p>
<p>Monetary focuses only on banking, credit and the money supply, while fiscal focuses on government expenditures and taxation.</p>
<p>ohhhh ok, i see</p>
<p>i just said buying sec's</p>
<p>I have a feeling I messed up on the questoni where it asks you how Stagflation affects the Phillips Curve.</p>
<p>I put that it cannot be illustrated on the SRAS since stagflation is inconsistent with stagflation.. it shows the inverse relationship between higher umemployment and lower inflation...</p>
<p>I was going to say that it shifts upward... but thought it was a trick :(</p>
<p>Hopefully my grader understands.. what did you guys do?</p>
<p>the phillips curve definitely shifts outward. more inflation AND more unemployment.</p>
<p>Was this part of the Free Response question? For some reason I cant remember this question at all, I hope I didnt skip a part of a question or something.</p>
<p>Let me clarify, I remember the Phillips Curve FR question, I just cant remember anything on stagflation.</p>
<p>Yeah. The FR asked you to show the effects of stagflation or something, and I had to draw the Phillips curve outward - stagflation is a rise in inflation and unemployment, so the curve shifts outward.</p>
<p>one of the little parts to the question was to draw staglation, it was really easy and took roughly half a second (put a dot on the graph farther out towards the tpright) so you probably don't remember lol</p>
<p>Did anybody here take Micro as well as Macro? Remember what you put down for the profit max. number of workers for FR #3? I put three, because that's where the MRP=MFC (I think I screwed up the terms!!! MFC...I put as MRC AND MFC...how many points do they generally take off for that? :(...like I explained why it would max profits...just screwed up terms...errrrgggghhh)</p>
<p>Umm. NVM. I got it wrong...:(. I screwed the equation...muwwaaaah.</p>
<p>a shirt makes 20 bucks a pop, and a worker costs 120 to hire</p>
<p>so to make MC equal to MR, you've got to make 6 shirts to equal the cost of the guy</p>
<p>the 6th guy makes more than 6 shirts, but the 7th guy makes less than that many so you're at a loss</p>
<p>it was actually like 6.3 workers i think, i forget exactly what it was</p>
<p>I thought 5 workers was the answer because MR = MC...</p>
<p>at 5 workers, he makes 240 worth of new shirts.. minus the 120 it cost to hire him.. thus MR = 120.</p>
<p>Marginal Cost is 120 since it costs 120 to hire each additional worker..</p>
<p>blah :D</p>
<p>Here is a link to Micro Free Response 2005:</p>
<p>For number 2, were the answers:</p>
<p>a. i. $12, 100 units
ii. A+B+C+F
iii. D+G+E</p>
<p>b. No, because price consumers pay rises by only $1.</p>
<p>c. i. $11
ii. $160
iii. A
iv. F+G</p>