Home / Flashcard library / High school & admissions / AP Macroeconomics / Policy and Graphs

High school & admissions

AP Macroeconomics — Policy and Graphs flashcards

10 of 74 cards free to study here · 3 topics · the whole deck is built into Willys

Units 4–6: money, banking and the money multiplier, the money market and monetary policy, loanable funds, the Phillips curve, money growth, deficits and crowding out, growth, the balance of payments and the foreign exchange market, with graph shifts described in words.

Get the app All AP Macroeconomics decks

Learn deck · part of AP Macroeconomics · written against: College Board AP Macroeconomics Course and Exam Description (six units). Updated 2026-10-10.

Study the free sample

10 cards from the deck as they are. Flip, rate yourself, filter by topic; your progress stays in this browser.

The 10 sample cards as a list
  1. The central bank sells bonds on the open market, driving bond prices down. What happens to interest rates, and why?
    Interest rates rise. A bond's fixed payments divided by a lower price give a higher yield, so bond prices and interest rates always move in opposite directions.
    Financial Sector › Financial Assets and Interest Rates
  2. What does liquidity mean, and how do cash, a savings account and a house rank on it?
    Liquidity is how easily an asset can be turned into spending power without losing value. Cash is the most liquid, a savings account is close behind, and a house is far less liquid.
    Financial Sector › Financial Assets and Interest Rates
  3. How does owning a share of stock differ from owning a bond?
    A stock is a share of ownership that may pay dividends and rise in value; a bond is a loan to the issuer that promises fixed interest payments and repayment of principal.
    Financial Sector › Financial Assets and Interest Rates
  4. A bank lends at a 7% nominal interest rate when inflation is expected to be 3%. What real interest rate does it expect to earn?
    About 4%: real interest rate ≈ nominal rate − expected inflation.
    Financial Sector › Financial Assets and Interest Rates
  5. What relationship does the short-run Phillips curve show?
    An inverse short-run trade-off between inflation and unemployment: moving to lower unemployment comes with higher inflation.
    Long-Run Consequences of Stabilization Policies › Phillips Curve
  6. Where is the long-run Phillips curve, and why is it vertical?
    It is vertical at the natural rate of unemployment. Once expected inflation catches up with actual inflation, unemployment returns to the natural rate whatever the inflation rate.
    Long-Run Consequences of Stabilization Policies › Phillips Curve
  7. AD increases. On the Phillips curve diagram, is this a shift or a movement, and in which direction?
    A movement up and to the left along the SRPC: inflation rises and unemployment falls.

    Mnemonic: AD moves you along the SRPC; SRAS shifts it.
    Long-Run Consequences of Stabilization Policies › Phillips Curve
  8. What does the current account of the balance of payments record?
    Trade in goods and services, net income from abroad (such as interest and dividends across borders) and net transfers such as remittances and foreign aid.
    Open Economy › Balance of Payments
  9. What does the financial (capital) account record?
    Cross-border purchases and sales of assets: foreign direct investment, portfolio investment in stocks and bonds, and changes in official reserves.
    Open Economy › Balance of Payments
  10. A U.S. company builds a factory in Mexico. Where is this recorded in the U.S. balance of payments, and in which direction?
    In the financial account, as an outflow (debit): an American entity is acquiring a foreign asset.
    Open Economy › Balance of Payments

Unlock the whole deck

You are studying a free 10-card sample. All 74 cards of AP Macroeconomics — Policy and Graphs, the other 2 AP Macroeconomics decks, and spaced-repetition scheduling are built into Willys. 14-day free trial, then $14.99 a year.

Get the app

In Willys, tap Exam Library at the top of your Decks (or Browse Exam Library… under the + button), find the exam on its shelf or by search, tick it and tap Add.

More AP Macroeconomics decks

Concepts and ModelsPractice Questions

← All AP Macroeconomics decks, with the study guide and topic outline.

About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

  • Topic outline follows the College Board AP Macroeconomics Course and Exam Description (effective Fall 2026), Units 4–6 (used as an outline only; no text copied).
  • OpenStax Principles of Economics 3e, consulted as a reference; no text copied.
  • Checked against Mankiw, Principles of Macroeconomics (reference only; no text copied).
  • Facts also checked against Federal Reserve Board pages (Reserve Requirements, Interest on Reserve Balances, H.6 Money Stock Measures) and the U.S. Bureau of Economic Analysis International Transactions Accounts methodology summary (public domain; reference only; no text copied).

These are independent study notes written for Willys. They are not official exam material, may contain mistakes, and are no substitute for your course, your teacher or the exam owner's own publications. Found an error? Tell us — corrections ship as a new version of the deck.

AP® is a trademark registered by the College Board, which is not affiliated with, and does not endorse, this product.

Use of these pages is covered by our Terms of Use.