Arthur Raymond Chief Reader Muhlenberg College Meet the Test Development Committee APAC, Las Vegas, 2007

1 / 11

# Arthur Raymond Chief Reader Muhlenberg College Meet the Test Development Committee APAC, Las Vegas, 2007 - PowerPoint PPT Presentation

Arthur Raymond Chief Reader Muhlenberg College Meet the Test Development Committee APAC, Las Vegas, 2007. Top Ten Errors on the 2007 Economics AP Exam. Micro 1 (b) (1 and 2). Assume that the government imposes a lump sum tax on GCR (a firm w/patent)

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

## Arthur Raymond Chief Reader Muhlenberg College Meet the Test Development Committee APAC, Las Vegas, 2007

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
• Meet the Test Development CommitteeAPAC, Las Vegas, 2007
Micro 1 (b) (1 and 2)
• Assume that the government imposes a lump sum tax on GCR (a firm w/patent)
• What will happen to output and market price? Explain.

Market price and output are unchanged because MC is unchanged by a lump-sum tax.

Macro 2 (c) (3)
• Assume that the open-market operation that you indicated in part (b) (purchase) is equal to \$10 million. If the required reserve ratio is 0.2, calculate the maximum change in loans throughout the banking system.
• \$40 million
Micro I (c) (4)
• (c) Assume … that the government grants a per-unit subsidy to GCR for Aspy (firm w/patent).
• (i) What will happen to output and market price? Explain.
• MC falls (so P falls and Q increases)
Macro 2 (e) (5 and 10)
• Assume that the Federal Reserve’s action results in some inflation. What would be the impact of the open market operation (purchase) on the real rate of interest?
• Real rate falls because nominal rate decreases and inflation increases.
Micro 3 (d) (6)
• Is choosing an early departure a dominant strategy for Rankin Wheels?
• (No) Rankin Wheels’ best strategy changes as Roadway’s strategy changes.
Macro 2 (a) (7)
• Define the Federal Funds Rate
• It is the interest rate banks charge to other banks for borrowed reserves.
Micro 2 (a) (8)
• Using the specific information above, draw a correctly labeled graph of HZRad’s current supply for unskilled labor. (…can hire all the unskilled labor it needs at a wage of \$90 per day per worker.)
Macro 1 (b) (9)
• Using a correctly labeled graph of the foreign exchange market for the US dollar to show the impact of the change in relative price levels (PUS falls relative to Japan) on each of the following.
• (i) Demand for the dollar
• (ii)
• D shifts up