Ap Macroeconomics Cheat Sheet Page 4
ADVERTISEMENT
1
2
3
4•
‘Crowding Out’ of Gross Private Investment (effect of deficit spending)
–
Assume Expansionary Fiscal Policy (G↑ and/or T↓ .: government budget moves toward deficit)
deficit spending .: D
→ or S
← .: r%↑ .: I
↓ (partially or completely offsets intended increase in AD)
LF
LF
G
•
‘Crowding In’ of Gross Private Investment (effect of budget surplus)
–
Assume Contractionary Fiscal Policy (G↓ and/or T ↑ .: government budget moves toward surplus)
budget surplus .: D
← or S
→ .: r% ↓ .: I
↑ (partially or completely offsets intended decrease in AD)
LF
LF
G
•
Expansionary Fiscal Policy Net Export Effect (counters policy)
–
Assume Expansionary Fiscal Policy (G↑ and/or T↓ .: government budget moves toward deficit)
deficit spending .: D
→ or S
← .: r%↑ .: D
→ .: $↑ .: U.S. goods/services relatively expensive and foreign goods/services are
LF
LF
$
relatively cheap .: X↓ and/or M↑ .: X
↓
N
•
Contractionary Fiscal Policy Net Export Effect (counters policy)
–
Assume Contractionary Fiscal Policy (G↓ and/or T ↑ .: government budget moves toward surplus)
budget surplus .: D
← or S
→ .: r% ↓ .: S
→ .: $↓ .: U.S. goods/services relatively cheap and foreign goods/services are relatively
LF
LF
$
expensive .: X↑ and/or M↓ .: X
↑
N
•
Expansionary Monetary Policy Net Export Effect (reinforces policy)
–
Fed buys bonds, DR↓, and/or RR↓ .: ER↑ .: MS → .: i%↓ .: S
→ .: $↓ .: U.S. goods/services relatively cheap and foreign
$
goods/services are relatively expensive .: X↑ and/or M↓ .: X
↑
N
•
Contractionary Monetary Policy Net Export Effect (reinforces policy)
–
Fed sells bonds, DR↑, and/or RR↑ .: ER↓ .: MS↓ .: i%↑ .: D
→ .: $↑ .: U.S. goods/services relatively expensive and foreign
$
goods/services are relatively cheap .: X↓ and/or M↑ .: X
↓
N
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Education