<p>economics, what if it wasnt worth two points just one. it was where how much will the money supply increase, or how much can be loaned out… those questions DID NOT say show how this happens, but just what is the answer…</p>
<p>on previous ap tests, it says in the scoring guidelines… one point for such and such… and then it moves onto the next part of the question. it doesnt have a point capacity for an “explanation”</p>
<p>and yes, you are borderlining a 5!</p>
<p>I don’t remember question two exactly, but I think that question two from the 2004 Form B exam is the same or very similar but in reverse:</p>
<p><a href=“Supporting Students from Day One to Exam Day – AP Central | College Board”>Supporting Students from Day One to Exam Day – AP Central | College Board;
<a href=“Supporting Students from Day One to Exam Day – AP Central | College Board”>Supporting Students from Day One to Exam Day – AP Central | College Board;
<p>dang it…on number 2, i moved Demand for loanable funds to the right because investors took their money out, leaving less money to loan out, so people demand more?</p>
<p>is that wrong?</p>
<p>Somebody on the APWH discussion posted their question given at the same time as Macro, but I cannot find it or Econ on AP Central.</p>
<p>Can somebody more savvy than myself post a link to the Macro (and maybe micro) question?</p>
<p>
The question stated that there was a decrease in foreign investment right? Yeah sorry, the correct answer was that you should shift the Supply of Loanable Funds curve left because, you know, the supply of credit by foreign investors left the country. This would cause interest rates to rise.</p>
<p>TWSA50 - good find, yeah the question you linked to is the exact opposite of this test’s #2 (an inflow of foreign investment, as opposed to this question’s outflow of foreign investment). Thus, for the correct answers everyone can just look at that and the correct answer will generally be the exact OPPOSITE.</p>
<p>Also yeah, can anyone find the link to the question? Collegeboard usually posts it, I don’t know if they have yet because I don’t know where to even look… that way we could actually discuss it (especially question #3, which no one remembers word for word)</p>
<p>mcgoogly is right about number two, the supply of loanable funds shifts left, increasing the interest rate.</p>
<p>is it 25 million or is it 20 million?</p>
<p>and like the other thing i fink i wrote 50 50, some guys wrote 40 50, others worte 50 40…
dont noe</p>
<p>does anyone know if they follow your mistake throughout the free response like they do in calc??</p>
<p>for instance if you got the shift of the supply curve wrong in the loanable funds market, that would basically screw the whole problem up unless they followed your mistake…</p>
<p>so the shift of Tara’s supply curve to the left in the loanable funds market raises the interest rate. Now since Tara has a higher interest rate wouldn’t that increase foreign investment because more countries would want to invest on Tara’s higher interest rate???</p>
<p>Yeah I guess a little. This is true of practically everything (a huge crash of the stock market will also entail a couple more people going into the market to buy the ultra-cheap stocks), but the increase in foreign investment due to the rising interest rates is the SECOND step (which they don’t ask for), and is not going to be large enough to compensate for the exodus of foreign investors that Tara was apparently experiencing.</p>
<p>wait so since there is a rise in foreign investment in Tara due to the higher interest rates does Tara’s currency appreciate then?!?!</p>
<p>NO, there is no rise in foreign investment in Tara, there is a net huge decrease in foreign investment. The premise of the FRQ (as far as I can recall) was that foreign investment decreased, because of fears of political and economic instability in the country. Trust in what the AP says: it said foreign investment (overall, net) decreased, so foreign investment decreased.</p>
<p>This means that, at about the same time, these things happen:
<p>i thought the Tara thing was a Micro FRQ</p>
<p>2a
Capital outflow from Tara – increase in supply of Tara$–depreciation of Tara$ relative to X$.</p>
<p>Alternative (and less good) answer for 2a</p>
<p>Political instability in Tara leads to a decrease in demand for Tara$ denominated financial assets–decrease D of Tara $.</p>
<p>The scoring will be 1 or 2 points. 1 for “depreciation” and 1 for Increase in Supply of Tara$ (or perhaps decrease in D of T$)
2b
Decrease in investment in Tara is a capital outflow–decrease in Supply of LF–increase in r in Tara.</p>
<p>2 or 3 points in the scoring. 1 for correct LF graph with upward sloping s and downward sloping D (no vertical s). 1 point for decrease S of LF. 1 point for increase r.</p>
<p>2c
Side by side LF market and Investment market graphs.</p>
<p>Up r will decease interest sensitive I. I buys K. Decrease I leads to decrease K. Decrease K will decrease capital accumulation/stock of K and potentially decrease LRAS which is a decrease in the rate of growth.</p>
<p>Scoring is probably 2 or 3 points. Linkage between r and K one point, perhaps requiring the direction of the change. Linkage between K and LRAS, perhaps with direction of the change 1 point. Correct conclusion for decreasing the rate of growth 1 point. </p>
<p>Probably an 8 point rubric.</p>
<p>
</p>
<p>Here are my microeconomics FRQ responses; please do tell me if I got some wrong.</p>
<p>Number 1 Answers</p>
<p>(a) Graph</p>
<p>(b) No change because it’s a lump-sum subsidy.</p>
<p>(c) Where demand intersects ATC</p>
<p>(d) Accounting profits are positive because ATC/Demand intersection indicates zero economic profits. Economic profits account for implicit costs, which accounting profits ignore; as such, accounting profits are positive here.</p>
<p>(e) Quantity would be larger because it’s a positive externality–it’s desirable.</p>
<p>Number 2 Answers</p>
<p>(a) Producer surplus = 135</p>
<p>(b)
i. Tax revenue = $120
ii. $4–they get $6, but they have to pay $2 to taxes.
iii. Producer surplus = 60</p>
<p>(c) Elastic–you can do the annoying calculations or you can note that it’s on the left part of the demand curve.</p>
<p>(d) Harms allocative efficiency because of deadweight loss. In addition, both consumer and producer surplus are reduced. (No idea about explanation here)</p>
<p>Question 3 Answers</p>
<p>(a) North because Blue Mart makes more money that way.</p>
<p>(b) Yes, South is the dominate strategy for Red Shop because they make more money that way–Blue Mart is clearly stronger in the North. (No idea about explanation here)</p>
<p>(c) Red Shop will locate South, and Blue Mart will locate North.</p>
<p>(d) $900, $1800; $3000, $5500; $7000, $4000; $3500, $3000.</p>
<p>For The Foreign Tara question </p>
<p>a. The currency depreciates. People are pulling their money out therefore the are using Tara currency to exchange for other nation’s currency. The foreign exchange market is flooded with Tara’s currency and demand for every other currency increases, therefore the currency depreciates.</p>
<p>b. Loanable funds is about the domestic supply. Because investors pulled money out of Tara, the amount of loanable funds has gone down, resulting in a leftward shift of the supply of loanable funds.</p>
<p>c. The higher interest rate due to the reduced amount of loanable funds forces economic growth to slow down or decline, since there is less future investment.</p>
<p>They finally released the FRQs <a href=“Supporting Students from Day One to Exam Day – AP Central | College Board”>Supporting Students from Day One to Exam Day – AP Central | College Board;
<p>So the high interest rates won’t make foreign investors get more of Tara’s money? ■■■
Ugh.
And for #3, I guess it’s $25 million then. ■■■</p>
<p>Problem 1
A) Short Run Philips curve and Vertical LRPC at natural rate of unemployment, intersecting at the 5% unemployment and 6% inflation
B) Nominal-inflation=2%
C) Sell Bonds
D) Nominal interest rate increases b/c money supply decreases
E) Decrease aggregate demand b/c higher interest rate means less investment
F) LRPC stays same, SRPC shifts to the left intersecting w/ LRPC at 3% inflation and 5% unemployment</p>
<p>Problem 2
A) Depreciates b/c the there is less demand for Tara’s currency
B) Decreases demand for loanable funds thus lowering real interest rate
C) Rate of economic growth will decrease due to less investment</p>
<p>Problem 3
A) i. $80
ii. $500
iii. $400
B) $25 million
C) I’m not sure but I said decrease and then made up some reason</p>
<p>For the last question I put $80, $500, $400, $25 million and got the last one wrong I know it (said that wages increased).</p>
<p>For the second question I put value depreciates for (a) but I shifted MLF supply to the left for part (b) (I’m pretty sure the right answer was supposed to be shift demand left). I however put growth rate decreases which I think is correct.</p>
<p>For 1st question I pretty much got everything poster above has.</p>
<p>are you serious…i thought real=nominal+inflation…■■■</p>