| Steven M. Reff Economics Lecturer University of Arizona (2007 - 2016) The 2015 University of Arizona Five-Star Faculty Award Steven Reff's Resume |
Unit 6: Open Economy -- International Trade & Finance
• Topic 6.1 Balance of Payments Account
• Topic 6.2 Exchange Rates
• Topic 6.3 The Foreign Exchange Market
• Topic 6.4 Effect of Changes in Policies and Economic Conditions
on the Foreign Exchange Market (FX Market)
• Topic 6.5 Changes in the FX Market and Net Exports
• Topic 6.6 Real Interest Rates & International Capital Flows
• Topic 6.1 Balance of Payments Account
• Topic 6.2 Exchange Rates
• Topic 6.3 The Foreign Exchange Market
• Topic 6.4 Effect of Changes in Policies and Economic Conditions
on the Foreign Exchange Market (FX Market)
• Topic 6.5 Changes in the FX Market and Net Exports
• Topic 6.6 Real Interest Rates & International Capital Flows
| (10% – 13% of the exam) |
| 5 - 7 class periods |
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| Week 13 |
Below are lessons for Unit 6: Topics 6.1 - 6.6 aligned to the AP® Macroeconomics CED.
You will have textbook readings, short videos with 3 multiple choice questions, workbook
assignments, multiple choice questions, "free" response questions and much more.
These resources can be displayed on the instructor's projection system inside the classroom,
or the instructor can copy the links and give to the students as homework.
Link to the AP® Macroeconomics CED (Course and Exam Description) to see in-depth
coverage on each of the topics listed below for Unit 6: Open Economy -- International
Trade & Finance.
You will have textbook readings, short videos with 3 multiple choice questions, workbook
assignments, multiple choice questions, "free" response questions and much more.
These resources can be displayed on the instructor's projection system inside the classroom,
or the instructor can copy the links and give to the students as homework.
Link to the AP® Macroeconomics CED (Course and Exam Description) to see in-depth
coverage on each of the topics listed below for Unit 6: Open Economy -- International
Trade & Finance.
| Principles of Macroeconomics |
Topic 6.1 Balance of Payments Account
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| Day 1: Week 13 |
| Remember, you still have all of the resources and assessments that The College Board® provides for you and your students. |
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| eWorkbook Activities Interactive: |
| eTextbook Reading: |
| eVideos -- Short Videos: |
| (3 min. or less, along with 3 multiple choice questions) |
| Unit 6 Open Economy -- International Trade & Finance |
Topic 6.2 Exchange Rates
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| Day 2: Week 13 |
| eTextbook Reading: |
| eVideos -- Short Videos: |
| eWorkbook Activities Interactive: |
| (3 min. or less, along with 3 multiple choice questions) |
Topic 6.3 The Foreign Exchange Market (FX)
| eVideos -- Short Videos: |
Topic 6.4 Effect of Changes in Policies and Economic Conditions
on the Foreign Exchange Market (FX Market)
on the Foreign Exchange Market (FX Market)
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| Day 4: Week 13 |
| eVideos -- Short Videos: |
| eWorkbook Activities Interactive: |
| (3 min. or less, along with 3 multiple choice questions) |
The current account (CA) records net exports,
net income from abroad, and net unilateral transfers.
The CA is not always balanced; it may show a
surplus or a deficit. A nation’s balance of trade
(i.e., net exports) is part of the current account
and may also show a surplus or a deficit.
The capital and financial account (CFA) records
financial capital transfers and purchases and
sales of assets between countries.
The CFA is not always balanced; it may show
a surplus (financial capital inflow) or a deficit
(financial capital outflow).
The balance of payments (BOP) is an accounting
system that records a country’s international
transactions for a particular time period. It consists
of the CA and the CFA.
Any transaction that causes money to flow into
a country is a credit to its BOP account, and
any transaction that causes money to flow out
is a debit. The sum of all credit entries should
match the sum of all debit entries (CA+CFA=0)
net income from abroad, and net unilateral transfers.
The CA is not always balanced; it may show a
surplus or a deficit. A nation’s balance of trade
(i.e., net exports) is part of the current account
and may also show a surplus or a deficit.
The capital and financial account (CFA) records
financial capital transfers and purchases and
sales of assets between countries.
The CFA is not always balanced; it may show
a surplus (financial capital inflow) or a deficit
(financial capital outflow).
The balance of payments (BOP) is an accounting
system that records a country’s international
transactions for a particular time period. It consists
of the CA and the CFA.
Any transaction that causes money to flow into
a country is a credit to its BOP account, and
any transaction that causes money to flow out
is a debit. The sum of all credit entries should
match the sum of all debit entries (CA+CFA=0)
In the foreign exchange market, one currency is
exchanged for another; the price of one currency in
terms of the other is the exchange rate.
If one currency becomes more valuable in
terms of the other, it is said to appreciate. If one
currency becomes less valuable in terms of the
other, it is said to depreciate.
exchanged for another; the price of one currency in
terms of the other is the exchange rate.
If one currency becomes more valuable in
terms of the other, it is said to appreciate. If one
currency becomes less valuable in terms of the
other, it is said to depreciate.
The demand for a currency in a foreign exchange
market arises from the demand for the country’s
goods, services, and financial assets and shows
the inverse relationship between the exchange rate
and the quantity demanded of currency.
The supply of a currency in a foreign exchange
market arises from making payments in other
currencies and shows the positive relationship
between the exchange rate and the quantity
supplied of a currency.
In the foreign exchange market, equilibrium is
achieved when the exchange rate is such that
the quantities demanded and supplied of the
currency are equal.
Disequilibrium exchange rates create surpluses
and shortages in the foreign exchange market.
Market forces drive exchange rates toward
equilibrium.
market arises from the demand for the country’s
goods, services, and financial assets and shows
the inverse relationship between the exchange rate
and the quantity demanded of currency.
The supply of a currency in a foreign exchange
market arises from making payments in other
currencies and shows the positive relationship
between the exchange rate and the quantity
supplied of a currency.
In the foreign exchange market, equilibrium is
achieved when the exchange rate is such that
the quantities demanded and supplied of the
currency are equal.
Disequilibrium exchange rates create surpluses
and shortages in the foreign exchange market.
Market forces drive exchange rates toward
equilibrium.
Factors that shift the demand for a currency
(such as the demand for that country’s goods,
services, or assets) and the supply of a
currency (such as tariffs or quotas on the other
country’s goods and services) change the
equilibrium exchange rate.
Fiscal policy can influence aggregate demand,
real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand,
real output, the price level, and interest rates, and
thereby affect exchange rates.
(such as the demand for that country’s goods,
services, or assets) and the supply of a
currency (such as tariffs or quotas on the other
country’s goods and services) change the
equilibrium exchange rate.
Fiscal policy can influence aggregate demand,
real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand,
real output, the price level, and interest rates, and
thereby affect exchange rates.
Topic 6.5 Changes in the FX Market and Net Exports (NX)
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| Day 5: Week 13 |
Factors that shift the demand for a currency
(such as the demand for that country’s goods,
services, or assets) and the supply of a
currency (such as tariffs or quotas on the other
country’s goods and services) change the
equilibrium exchange rate.
Fiscal policy can influence aggregate demand,
real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand,
real output, the price level, and interest rates, and
thereby affect exchange rates.
(such as the demand for that country’s goods,
services, or assets) and the supply of a
currency (such as tariffs or quotas on the other
country’s goods and services) change the
equilibrium exchange rate.
Fiscal policy can influence aggregate demand,
real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand,
real output, the price level, and interest rates, and
thereby affect exchange rates.
Topic 6.6 Real Interest Rates and International Capital Flow
Open Economy -- Same Questions as Above with ASAD and
Loanable Funds Graphs (Minimize Screen)
Loanable Funds Graphs (Minimize Screen)
| Day 3: Week 13 |
| eWorkbook Activities Interactive: |
(Minimize Screen)
(Minimize Screen)