How do you know whether the supply or demand curve needs to be shifted?</p>
For example, I was doing the [2008</a> FRQ](<a href=“http://apcentral.collegeboard.com/apc/public/repository/ap08_macro_econ_frq.pdf]2008”>http://apcentral.collegeboard.com/apc/public/repository/ap08_macro_econ_frq.pdf) #1 (part c) and I drew a leftward shift for my supply curve. In the rubric, my answer is an alternative that is “also accepted,” but I’ve had trouble with other FRQ’s where I shifted the wrong curve.</p>
Also, do Phillips curve graphs actually need to be curved or is a downward-sloping linear line okay? I’m self-studying so I can’t ask an AP teacher.</p>
Thanks!</p>
In the loanable funds diagram, increased gov spending without increasing taxes results in private borrowing. </p>
When you draw it as a supply shift, you are essentially saying that since the government is borrowing money there is less supply for private investment and thus, interest rates go up.</p>
Similarly, when you draw it as a demand shift you are saying that the demand for investment increases when the gov enters the market and thus, interest rates go up.</p>
While either is acceptable, make sure you don’t shift both (only one or the other).</p>
Also, I’m pretty sure that you can just draw a downward-sloping line for the phillips curve but I’m not 100%.</p>