Hardest Concepts In Macro (Part 1)
1. Comparative advantage. Specifically, determining how two countries should specialize and their terms of trade. The math isn’t hard, but it’s easy to get confused. The trick is to set up the question the same way every time. If the question gives you numbers in a sentence, convert it to a chart and use the same procedure you use on my videos and study guides. That way, it doesn’t matter what numbers they give you. Just follow the same procedure. Helpful Video- • 5 comparative advantage HACKS you nee...
2. Calculating the GDP deflator and converting nominal to real and real to nominal. The trick is to remember that the deflator is kind of like the CPI. Instead of being a basket of specific goods, it is a basket of everything, the nominal GDP, divided by that same basket adjusted for inflation, the real GDP, times 100. And just like CPI, the deflator tells you how much prices have changed. So if the deflator is 130 that means prices increased 30%. So if the real GDP was $50 billion, the nominal GDP would be 30% higher. ($60 billion). Helpful Video- • Macro Unit 2.6B- GDP Deflator Practic...
3. Long Run Adjustments. Macro exam questions have to be very specific. This is because the answer totally depends on whether they are asking about the short run or long run. For example, a tax cut for consumers would increase GDP in the short run but would have no change in the long run. The trick is to read the question carefully and to remember that, in the long run, the economy will automatically adjust when there are negative output gaps or positive output gaps. Helpful Video: • Long-Run Self-Adjustment- Macro Topic...
Need more help? Get the Ultimate Review Packet
www.ultimatereviewpacket.com
#apmacro