AP Macro Determinants

Demand shifters

1. tastes in preferences

2. market size

3. price of related goods (substitutes & complements)

4. expectations

Supply shifters

1. input prices

2. government tools

3. number of sellers

4. technology

5. prices of other goods

6. producer expectations

AD shifters

1. consumer spending

2. gross investment

3. government purchases

4. net exports

C+I+G+Xn

SRAS shifters

1. resource prices

2. productivity

3. inflation expectations

4. business taxes

5. business regulations

LRAS shifters

1. quantity of resources

2. quality of resources

3. productivity

4. technology

Money Demand

1. Asset demand for money

• desire to hold wealth as money instead of other assets

2. Transaction demand for money

• GDP = C+I+G+Xn

• Price level (dollar we need for transactions)

Money Supply

Determined by actions of the central bank and lending in the banking system

Shift for Supply of Reserves (for reserves market graph)

Open Market Operations (buying and selling bonds)

Investment demand shifters

Anything that impacts the profit potential of new investments

• Changes in the economic outlook

• Investment tax credits

Savings supply shifters

• Disposable income

• Economic outlook

• Foreign investment

Phillips Curve

Inflation vs. Unemployment rate

• mirrors ASAD

LRPC shifter

Changes in national rate of unemployment (NRU)

• changes in structural or frictional unemployment

Foreign exchange market demand shifters

1. Demand for exports

• foreign tastes

• foreign national income

• price levels

2. Interest Rates

• foreign and domestic

3. Expected exchange rate

Foreign exchange market supply shifters

1. Demand for imports

• domestic tastes for foreign goods

• domestic national income

• price levels

2. Interest rates

• foreign and domestic

3. Expected exchange rate