<p>a shift in AS i don’t think, ever affects interest rates.</p>
<p>@Shizzle really? Micro is owning up my butt! I’m having a real difficulty learning the material, then again I only self-studied for 2 weeks haha!</p>
<p>Macro is so easy, but the actual class for it made it easier.</p>
<p>Consistently scoring 4-5s on exams, i’ve taken over 9 exams ~_~</p>
<p>For Macro, what percentage of the raw score comes from MC and what part comes from FR?</p>
<p>I think its about 50-50, I could be wrong, the last exam I took said MC was 66% and FRQ was the remaining other.</p>
<p>It’s most like 55-60 for MC and 40-45 for FRQ</p>
<p>Macro is 2/3 MC : 1/3 FRQ</p>
<p>^ there we go, thanks for clarifying for both of us haha!</p>
<p>Could someone explain interest rates? When interest rates go up, is it talking about the interest rate banks pay you for investing? or the interest rate you pay for borrowing?</p>
<p>and what does high interest rate affect? low interest rate?</p>
<p>thanks</p>
<p>When interest right is high, foreign investment will increase, causing the dollar to appreciate. But domestic investment will decrease. Foreign investment will only occur if foreign is higher than their domestic interest rate. </p>
<p>When interest rate is low, domestic investment will increase, causing AD to shift to the right, thus increase real GDP and output. </p>
<p>High interest rate coupled with inflation will help borrowers but hurt lenders at a fixed rate. It is hurting lenders because the dollar is worth less than what it was before the inflation took hit. It is helping borrowers because the money owed will worth less than what it was owed when it was fixed.</p>
<p>Interest rate is either be changed through the money supply or through investment as well as foreign investment. </p>
<p>Interest rate is only affected by monetary policies by the Feds, since they regulate money supply and interest rate, thus having an inverse relationship.</p>
<p>To my question, what are the affects/effects of supply shocks, both negative and positive?</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;
pg 25/47</p>
<p>can someone please explain #21 and #22? the output and total cost table is given, and we’re supposed to find TVC and the profit-maximizing level of output.</p>
<p>pleaaaase help! thanks! (this is micro btw)</p>
<p>so is interest rate the rate banks pay you for investing? or you pay for borrowing?</p>
<p>
Oh I see what you’re doing, you confused Investment (as in I, the component of GDP, which is when businesses invest in capital production by say, building a factory), with the “investment” that people do in the stock market and such.</p>
<p>See, “domestic investment” doesn’t decrease when there’s a high interest rate, at least I don’t think the domestic investment that you’re thinking of. The supply of loanable funds increases as the interest rate rises, because people save more (which puts money in the bank, to go into lending and speculating).
BUT, investment by firms decreases as the interest rate rises. This is expressed by the Real Investment graph (I don’t know what it’s actually called…) where the x axis is real investment, y axis is interest rate, and there’s a downsloping investment curve.</p>
<p>And about supply shocks - I think you’re right, it doesn’t effect interest rates at all. Its effects are just those shown on the AD-AS graph. A supply shock causes the AS curve to shift backwards to the left, raising the price level and decreasing output (and thus increasing unemployment). Also, it causes the short run Philips Curve to shift rightward (which is bad). There are really no positive outcomes from a supply shock. It causes rampant stagflation, the kind seen throughout the later 70’s when OPEC raised oil prices and drove our economy into recession and double digit inflation.</p>
<p>Total Costs= Total Variable Costs + Total Fixed Costs</p>
<p>Remember that total fixed costs are exactly that–fixed. An example of this would be a blender you would use for a smoothie place. You paid for it once, it’s all done, you don’t need to worry about it anymore.</p>
<p>So, you know from the graph that the total fixed costs MUST be $13 because at 0 units of output, you already are in debt (lol). This is your total fixed costs–your blender. (NOTE: <em>average</em> fixed costs always decrease, but that’s because you’re taking a fixed amount, i.e. how much you paid for the blender, and then dividing it by continually growing numbers of output)</p>
<p>So, TFC= $13. At the fifth unit of output costs, overall, $43. Minus out the TFC, you get TVC, meaning that your total variable costs are $30. (P.S. <em>average</em> variable costs will end up being $5 as $30/6 units output= $5).</p>
<p>And you’re right about #22–we have no idea what the profit-maximizing output would be because we have no idea what price and marginal revenue are (remember that where MC=MR, we have the profit-maximizing price and output).</p>
<p>I actually had a class for Micro, but couldn’t finish out the year at my school so I ended up missing the education on Macro. More people get 5s on Micro… It’s pretty easy, but I need to finish reviewing everything BEFORE the tests.</p>
<p>@tan2007: Ah, thanks! My mind draws blanks at 12 AM… and in general… lol</p>
<p>Our teacher just made us practice the general effects of interest rates and such, we didn’t go into such detail as what kind of investment and whatever else you wrote haha. Most of the FRQ questions and MCs were very general also!</p>
<p>The micro stuff ^ there ^ clear up some stuff I was confused about! :D</p>
<p>Well, you really just need to memorize the curves for the 4 market systems and they will be used to answer any of the questions. If you’ve got that down it’s like 60-70% of the test. Then there’s PPC curves which are easy and elasticity.</p>
<p>For Macro I still need to learn fiscal and monetary policy, plus I should probably study interest and inflation more in-depth…</p>
<p>Actually the 60-70% was probably an exaggeration, but I swear it’s the most important and tested material.</p>
<p>What are the four curves for the market system? I should really know this… but I haven’t even practiced much on drawing those darn graphs…</p>
<p>I also need help with just understanding monosopists(sp) and monopolies, just when it gets into the gritty nitty stuff.</p>
<p>Anyone care to explain to me?! An elaborate or condense summary(ies) is nice :D</p>
<p>do you guys know where to find the AP score ranges for the past few years of micro and macro exams? like the minimum composite scores to get a 5, or 4, etc :)</p>
<p>Monopsony is essentially there is only one source of labor (a union) that will restrict labor supply therefore increasing labor price. Monopoly is a firm that restricts supply therefore raising prices. A bilateral monopoly is when you have a monopoly hiring from a monopsony.</p>
<p>@ChristianWu:</p>
<p>The four markets are Perfect Competition, Monopolistic competition, Oligopoly, and Monoply. For some reason the PR didn’t go through Oligopoly graph, and that one is the hardest.</p>