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Module Putting it All Together

45. Module Putting it All Together. KRUGMAN'S MACROECONOMICS for AP*. Margaret Ray and David Anderson. What you will learn in this Module :. How to use macroeconomic models to conduct policy analysis How to approach free-response macroeconomics questions.

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Module Putting it All Together

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  1. 45 ModulePutting it All Together • KRUGMAN'S • MACROECONOMICS for AP* Margaret Ray and David Anderson

  2. What you will learnin thisModule: • How to use macroeconomic models to conduct policy analysis • How to approach free-response macroeconomics questions

  3. A Structure for Macroeconomic Analysis • A starting point • A pivotal event • Initial effects of the event • Secondary and long-run effects of the event

  4. The Starting Point • AD/AS Model • Long-run macroeconomic equilibrium • A recessionary gap • An inflationary gap

  5. The Pivotal Event • Recession • Inflation • Expectations change • Wealth change • Supply shocks

  6. The Initial Effect of the Event • The effects of a curve shifting

  7. Secondary and Long-Run Effects of the Event • Secondary Effects • Changes in the price level or real interest rate result in changes in some or all of the following: • International Capital Flows • Net Exports • Investment

  8. Secondary and Long-Run Effects of the Event • Long-run Effects • Government budget • "Crowding Out" • Capital formation • Economic growth

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