Macroeconomics Unit 6 COMPLETE Summary - Foreign Exchange and Trade

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Күн бұрын

This video covers all of the key points of Unit 6 from the AP Macroeconomics Course Exam Description (CED). Balance of Payments (current account as well as capital and financial account), Foreign exchange markets, capital inflows and outflows, balance on trade, etc.
For more help with unit six, there are content reviews, review games, and practice exercises for you at: www.reviewecon.com/ap-macroec...
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Note: Topics are out of order because this is the oder in which they are covered in the ReviewEcon.com Total Review Booklet.
Note: AP©, Advanced Placement Program©, and College Board© are registered trademarks of the College Board, which was not involved in the production of, and does not endorse, this material.

Пікірлер: 163

@user-do8yk8go8t Ай бұрын

taking the ap macro exam in less than 3 hours. thanks for your help! you’re amazing

@ReviewEcon Ай бұрын

You're very welcome! Good luck!

@axloggang4223 2 ай бұрын

Your demeaner and way of speaking are both extremely refreshing. Not only is your content informative, but you got a smile on you face while you do it. I aspire to have your charisma, thank you for helping me out.

@ReviewEcon 2 ай бұрын

Thank you very much! Good luck with your exams!! 🤘😎

@thegrantmeister4114 3 жыл бұрын

Ah yes here we are again with a short time before a test panic reviewing

@ReviewEcon 3 жыл бұрын

I hope it helps! Good luck!

@randomspectator2580 3 жыл бұрын

12 minutes before it :)

@ReviewEcon 3 жыл бұрын

@@randomspectator2580 good luck!

@drewgoodove3259 2 жыл бұрын

Whoever runs Review Econ, thank you so much! The series of review videos on this channel was the reason I did well on the exam, and I seriously cannot thank you enough.

@ReviewEcon 2 жыл бұрын

You're very welcome and congratulations! I am so glad ReviewEcon helped you.

@shambles168 Жыл бұрын

He’s Jacob Reed

@gori6577 Ай бұрын

wish me luck on the macro ap tomorrow, currently cramming 🙏

@ReviewEcon Ай бұрын

Good luck!

@ayushbanerjee1187 2 жыл бұрын

Got my Macro Exam tomorrow. I was grinding Jacob Clifford to understand forex until I stumbled upon this video. I was lucky to find this, and I might just pull it off tomorrow.

@ReviewEcon 2 жыл бұрын

You got this! Good luck tomorrow!!

@kavybaby 6 ай бұрын

did you pull it iff

@zenon1177 Ай бұрын

@@kavybaby I wondering the same thing but his comment was from 2 years ago lol

@quonkylops Жыл бұрын

My final is today and tomorrow. We're extra rushed because of a natural disaster early in the year, and I was gone for half this unit and some other ones for health. You're a godsend bro!!

@ReviewEcon Жыл бұрын

I'm so glad my video helped! Good luck with your finals and continued recovery from the natural disaster!

@hugowong7697 3 жыл бұрын

Thank you for being my real econ teacher.

@ReviewEcon 3 жыл бұрын

I'm glad to be any help I can. Sometimes it just takes a different example or different words. 😀 Good luck with your exams!

@micosstar Жыл бұрын

@ilikechips2596 Ай бұрын

i binged your videos for the past 4 days. last friday i watched micro u1 and u2, saturday i watched micro u3 u4 u5 and u6, yesterday i watched macro u2 and u3, today i finished macro with u4 u5 and u6. thank you for helping me with my ap prep, and i really appreciate the flashcards and MCQs on your website.

@ReviewEcon Ай бұрын

I'm happy to help! Good luck on the exam! 😄

@RaxhelHilty Ай бұрын

THIS good luck on aps 😇

@YaxuanShi-oi2yz 2 ай бұрын

I used to spend like 225 dollars per class to study Econ but still didn’t figure out. But after watching these video of ReviewEcon, I understood and be able to link different unit together and explain how they affect each other. Thank you so much, you’re such a life saver ❤

@ReviewEcon 2 ай бұрын

Thank you for sharing your experience! I'm so glad my videos have helped! Good luck on your exams!

@sribala1692 3 жыл бұрын

Can't thank you enough for these videos!! Theyve been so incredibly helpful for studying for my AP test

@ReviewEcon 3 жыл бұрын

You're very welcome! Good luck with your exams!

@spencerlawyer2678 2 жыл бұрын

Oh my god. Im so disappointed that I didnt find thesw videos sooner because I wouldve been doing so much better in Econ. Thank you so much! 😭

@ReviewEcon 2 жыл бұрын

Me too! I wish you the best of luck on your exams.

@axelsantamaria9951 2 жыл бұрын

absolutely amazing videos. watched them. all and it all makes sense now. hoping for a 3 or higher. on. the ap tomorrow

@ReviewEcon 2 жыл бұрын

Good luck tomorrow! You got this!

@andrewjaja Жыл бұрын

Slacked off these past 2 weeks and your videos are so good at explaining the concepts. Macro test tomorrow 😬😬😬

@ReviewEcon Жыл бұрын

Good luck tomorrow!

@lukeebduck647 Жыл бұрын

We’re in the same boat my friend

@navyamehta8193 2 ай бұрын

I leave my AP macro class early every day this is such a helpful way to catch up on the notes I missed and continue maintaining a good grade 🙏🏼

@ReviewEcon 2 ай бұрын

I am so glad my videos have helped! Good luck on your exams!

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@ReviewEcon Ай бұрын

You're very welcome! Good luck on your exam!

@GrizzDemon Ай бұрын

Helped me so much litterally watching this the morning of my AP thank you so much 😭😭😭😭

@ReviewEcon Ай бұрын

You're very welcome! Good luck!

@booman00 3 жыл бұрын

Macro exam tomorrow, thanks for the help, don't stop making videos

@ReviewEcon 3 жыл бұрын

You're welcome! I certainly won't! Good luck on your exams!

@booman00 3 жыл бұрын

@@ReviewEcon thank you!

@jennapaige467 3 жыл бұрын

Thank you for this review! It was very helpful :)

@ReviewEcon 3 жыл бұрын

I'm so glad! You're welcome!

@micosstar Жыл бұрын

(: love how youtube puts a unit 6 macro review video... when im still in unit 5, it knows i go to sheldon

@chodxnielmobile671 Жыл бұрын

Just got out of the exam, and feeling pretty confident…. These videos are a lifesaver

@ReviewEcon Жыл бұрын

Awesome! Good luck in July when scores are released!

@Awesome-oh7op 3 жыл бұрын

Thank you for this!!

@ReviewEcon 3 жыл бұрын

Your very welcome!

@ottojjgw4075 3 жыл бұрын

Thank you! Great video!

@ReviewEcon 3 жыл бұрын

You're welcome! And thank you!

@patrickw6126 Жыл бұрын

Cramming all these videos before Thursday

@ReviewEcon Жыл бұрын

Good luck on your exams! You got this!

@jebhunter4256 2 жыл бұрын

Thanks for the great Review!

@ReviewEcon 2 жыл бұрын

You're very welcome! Good luck tomorrow!

@sankalps.9775 Ай бұрын

Thanks so much! You saved me. I subscribed!!

@ReviewEcon Ай бұрын

You're very welcome! Good luck!

@user-ib2jv5er2v 2 жыл бұрын

Thanks for this video which help me cramming for the ap test tomorrow, All I did not totally understood is now fixed

@ReviewEcon 2 жыл бұрын

Perfect! Good luck on the exam!

@American_2 Ай бұрын

Thanks a lot, I prolly got a good score on the exam today.

@ReviewEcon Ай бұрын

You're very welcome!

@sunghoonkim9449 3 жыл бұрын

So underrated. Thank you so much for this, you'll be the next Jacob Clifford one day

@ReviewEcon 3 жыл бұрын

You're too kind. Good luck on the exam!

@aidincallas63 Жыл бұрын

Thanks for the help, I'm sure I'll ace my exam!

@ReviewEcon Жыл бұрын

You're very welcome! Good luck!!

@terminatorprogaming8163 2 жыл бұрын

Got my exam tomorrow, thx for the help! hoping to do good

@ReviewEcon 2 жыл бұрын

You will! Good luck! You got this!

@MeMe-bo5le 2 ай бұрын

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@ReviewEcon 2 ай бұрын

Thank you! Good luck on your exams!

@zoltansimon2124 3 жыл бұрын

Great!

@ReviewEcon 3 жыл бұрын

Thank you!

@samrudhghanta1848 2 ай бұрын

hi again! would u be able to go over some long and short frqs for micro and macro? like would u be able to walk us through how to do them and what our thought process should be? thanks again for all the helpful material!

@ReviewEcon 2 ай бұрын

Here you go: www.reviewecon.com/macro-frq Just be aware these FRQ videos are from before ample reserves were added to the exam so anything about unit 4 might be a bit different now. You can also search for "reviewecon unboxing" to see how approached the last few years' FRQs right when they were released (before the rubrics were released).

@samrudhghanta1848 2 ай бұрын

@@ReviewEcon thanks so much!!

@colonelh.s.l.3834 3 жыл бұрын

Amazing video :)

@ReviewEcon 3 жыл бұрын

Thank you! Good luck with this year's exams!

@colonelh.s.l.3834 3 жыл бұрын

@@ReviewEconthank you! keep up those great videos!

@numaniqbal2261 2 жыл бұрын

Thankyou very much,

@ReviewEcon 2 жыл бұрын

You're welcome again!

@shinedownracing425 Ай бұрын

Thank you so much I was struggling with unit 6 but this made it a lot clearer! I do have a question, when there is a change in interest rates, will that always result in a double shift of both supply and demand? And is there any effect on the graph for the market of the other currency?

@ReviewEcon Ай бұрын

Interest rate changes are a double shift in the ForEx market, but the CB has only required one shift on exams. They tell you which curve to shift, or they will accept either shift. Also when one currency has a demand shift, the supply of the other currency will shift the same direction (because when you demand one currency you supply the other) and when there is a supply shift, the demand of the other currency will shift the same direction (because when you supply one currency you demand the other). Good luck on the exam!

@shinedownracing425 Ай бұрын

I understand, thank you!

@noahadkinson2678 Ай бұрын

Time to lock in

@ReviewEcon Ай бұрын

Good luck!

@alexanderaridgides4572 Ай бұрын

If the CA + CFA = 0, how does the CFA increase to balance out the equation, for example, when net exports decrease (CA goes down)? Thank you!

@ReviewEcon Ай бұрын

Not part of the AP exam, but it's actually dual entry accounting. When $100 dollars (for example) leaves our country to purchase imports, it is counted as we sold $100 worth of assets (the dollars are the asset) in the Capital and Financial account. So they automatically always balance out. 😄

@alexanderaridgides4572 Ай бұрын

@@ReviewEcon Ah okay, that makes sense. Thank you and also love the content!

@glennwatson3313 2 жыл бұрын

Two misspelled word in the description. corrections below. (current account as well as capital and financial account), Foreign exchange markets, capital inflows and outflows, balance on trade, etc.

@ReviewEcon 2 жыл бұрын

Thank you! I'll fix those soon!

@udgitapamidigantam2169 2 жыл бұрын

At 3:40 you said that an increase in interest rate will increase capital inflow. Wouldn't a higher interest rate decrease gross investment as we saw in unit 4?

@ReviewEcon 2 жыл бұрын

That is correct. This is where the distinction between foreign investment and domestic investment is important. Domestic investment (gross investment) is primarily businesses buying physical capital. Businesses borrow money to buy physical capital so they pay interest. As a result, lower interest means more gross investment. Foreign investment on the other hand is people in other countries saving money in domestic banks. Those foreign investors get paid interest. As a result, higher interest rates mean greater foreign investment. The capital inflow is foreign investors seeking high interest rates. In the loanable funds market, business investment is in the demand curve, while foreign investment is in the supply curve. I hope that helps!

@udgitapamidigantam2169 2 жыл бұрын

@@ReviewEcon It does, thank you!!

@AdityaSUnboxings 3 жыл бұрын

I have a question around 3:40 and the interest rates. You said that when interest rates increase in the US, foreign investors will look to invest in the US, increasing capital inflow. I am unsure why foreign investors will invest in the US when interest rates increase. When interest rates increase, doesn't investment decrease because less people are willing to borrow?

@glennwatson3313 3 жыл бұрын

I'm not Review Econ but think about it. If you have extra money and you want to earn interest with it by putting it in a savings account or buying a bond or doing anything that would earn interest wouldn't you like to earn the highest interest rate possible? If you live in Spain and the interest rates is 5%, but in the U.S. its 7%, then, all things being equal, the opportunity to earn interest in the US is more attractive and so capital flow to the US increases. Remember, you are the lender in this scenario, not the borrower. As the lender you want a high interest rate.

@ReviewEcon 3 жыл бұрын

When you hear "investment" in AP macro, that usually means purchases of physical where business owners pay the interest. And they love lower interest rates and invest more with lower rates. You definitely get that part. But... And here is what's happening in this question. Foreign investment means foreign people saving their money in domestic banks and bond markets. Foreign investors get PAID that interest. So, foreign investors seek higher interest rates.

@chococlair2035 Ай бұрын

Hi, I also have another question in regards to interest rates (they keep confusing me hahaha) -- again, you mentioned that an increase in interest rates would incentivize foreign investors, and result in capital inflow as they purchase bonds. But wouldn't this go against the inverse relationship between interest rates and bond prices, as bonds would be desired less? And I thought that higher interest rates would result in less gross investment.

@ReviewEcon Ай бұрын

When interest rates increase, "already issued" bond prices will decrease. That's because already issued bonds pay the previous lower interest rate. The higher interest rate means that any money put in bonds earns a higher yield which is why financial Capital flows into the economy with higher interest rates. That happens even if bond prices (previously issued bonds) are falling due to the higher interest rates. I hope that helps!

@disappointed8916 Жыл бұрын

Why does the supply for currency slope upwards in the foreign exchange market graph? From my understanding, when the supply of a currency increases, the currency should depreciate as there's more of the currency, and similarly when supply of a currency decreases, the currency should appreciate. Why does the graph show the opposite of that?

@ReviewEcon Жыл бұрын

I believe you are confusing cause and effect. When supply increases (shifts to the right) the currency depreciates (the equilibrium exchange rate found at the supply and demand intersection). But the upward sloping supply reverses the cause and effect. When the currency appreciates there is an increase in the quantity supplied (not a shift of the curve but movement up the curve). That means more currency trades are willing to sell them currency when its price increases. This distinction between supply and quantity supplied is important and comes from unit one of AP macro. I hope that helps!

@myplace571 2 ай бұрын

question, 10:15 why does the supply curve shift right when theres capital outflow?

@ReviewEcon 2 ай бұрын

That is an increase in the supply of the foreign currency (there would be a decrease in the supply of domestic currency with higher rates). That is because foreign investors seek higher rates so they supply their currency (Pesos here) as they demand our currency (dollars). I hope that helps!

@myplace571 2 ай бұрын

@@ReviewEcon so in this context supply means to give up or give away?

@ReviewEcon 2 ай бұрын

@@myplace571 yes! In the foreign US Dollar exchange market, US citizens are suppliers and foreign citizens are demanders. For the Mexican Peso ForEx market, US citizens are demanders while Mexican citizens are suppliers.

@myplace571 2 ай бұрын

@@ReviewEcon alright thank you!

@cannedwill Жыл бұрын

bro single handedly saved my econ grade

@ReviewEcon Жыл бұрын

I'm so glad my videos helped! Good luck with your exams!

@jaytep5647 Ай бұрын

If a country's imports exceeds its exports, would its national debt increase? I ask this because a scoring guide on an AP Classroom question states "A country's national debt is not affected by its trade deficit or surplus" but I'm not sure why. Maybe I'm just confused about what makes up national debt.

@ReviewEcon Ай бұрын

The national debt is the sum of all previous deficits and surpluses for a nation's government. A government has a deficit when taxes are less than government spending. A government has a surplus when taxes are greater than government spending. Imports and exports are not parts of the calculation of the budget surplus or budget deficit. But, you may see the term trade deficit or trade surplus on the AP exam. A trade deficit occurs when imports are greater than exports and a trade surplus occurs when imports are less than exports. So when you see the term surplus or deficit it could be talking about trade deficit or government budget deficit. So read the question carefully! Good luck on your exams!

@thetientran 2 жыл бұрын

Is it the nominal interest rates or the real interest rates that affect the foreign exchange market?

@ReviewEcon 2 жыл бұрын

For the purposes of the AP exam, either one. Your teacher or professor may have a specific way of looking at it though.

@ryans9914 Ай бұрын

My king

@ReviewEcon Ай бұрын

Good luck Friday!

@Don-ri4tq 3 жыл бұрын

I love your work is there is any way I could donate you some money for your good work ?

@ReviewEcon 3 жыл бұрын

That is very kind! The only way to support my work at this point is by purchasing the Total Review Booklet (or for teachers, purchasing my Google docs worksheets). www.reviewecon.com/total-review-packet But don't feel obligated! I am happy, you have found my work valuable.

@judyliang2002 Ай бұрын

So does that mean an increase interest rate decreases domestic investment but increases foreign investment?

@ReviewEcon Ай бұрын

Correct!

@judyliang2002 Ай бұрын

@@ReviewEcon can you also explain how increase interest rate leads to increase in budget deficit

@glennwatson3313 2 жыл бұрын

Do you have a macro unit 2?

@ReviewEcon 2 жыл бұрын

Yep! Here it is: kzfaq.info/get/bejne/qZN1Z7Oi2K3Kf4U.html

@thicccmeme2892 2 жыл бұрын

I’m studying for my ap exam and I hope this helps!

@ReviewEcon 2 жыл бұрын

I hope so too! Good luck!

@louis7428 Жыл бұрын

10:05 So the supply of pesos increases because the Mexican investors need more money to invest in America?

@ReviewEcon Жыл бұрын

Yes! If Mexican investors want to earn high interest in US banks (or bond markets), they need dollars to do it. That means Mexican investors sell (supply) pesos and buy (demand) dollars. So we see an increase in the supply of pesos and an increase in the demand for dollars. I hope that helps! Good luck tomorrow!

@averageytwatcher2060 2 жыл бұрын

9:26, did you mean to say equilibrium exchange rate?

@ReviewEcon 2 жыл бұрын

Yes! Exchange rate, not interest rate! I'll make an edit to make that more clear. Thank you for pointing out my mistake.

@averageytwatcher2060 2 жыл бұрын

@@ReviewEcon you can make an edit after you post it? How do you do that?

@ReviewEcon 2 жыл бұрын

@@averageytwatcher2060 done now. 😀 I just edited out the words "interest rate" so it just says the equilibrium plummets.

@ReviewEcon 2 жыл бұрын

KZfaq studio has a simple video editor to allow you to cut things out without posting a new video.

@jakedick7880 Жыл бұрын

Cramming 1 minute before my exam🥰

@ReviewEcon Жыл бұрын

Good luck!

@bodemartin6501 3 жыл бұрын

Clutch

@ReviewEcon 3 жыл бұрын

Glad you thought so! Good luck on the exams!

@sam-zm9yl 2 жыл бұрын

👍👍

@ReviewEcon 2 жыл бұрын

Thank you!

@logansmith4492 2 жыл бұрын

3:48

@ReviewEcon 2 жыл бұрын

Exchange rates show up ever now and again. Good luck on the exam!

@ubebabe. 3 жыл бұрын

12:14

@ReviewEcon 3 жыл бұрын

Important bookmark for sure. That chain of events can be tricky!

@aakashgupta5453 2 жыл бұрын

why did a decrease in supply of american goods lead to a decrease in demand for the goods in mexico? at 8:46

@ReviewEcon 2 жыл бұрын

The graph is not the supply and demand of goods, but the supply and demand for currency. When US income decreases (the x axis of the AS/AD model), we buy less of everything including goods made in Mexico. Since US demand for Mexican made goods decreases, that means US consumers supply fewer US dollars to the US dollar ForEx market and demand fewer Mexican Pesos in the Mexican Peso ForEx market. I hope that helps! Good luck on your exams!

@user-th8pr7no5p 2 жыл бұрын

@@ReviewEcon so the demand for a currency is independent of the people in that currency’s country, and is solely dependent on foreign countries? and the supply of a currency is solely dependent on the people in that currency’s country?

@ReviewEcon 2 жыл бұрын

@@user-th8pr7no5p correct. Domestic consumers are suppliers of domestic currency and the demanders of foreign currency. Foreign consumers are suppliers of foreign currency and demanders of domestic currency.

@user-th8pr7no5p 2 жыл бұрын

@@ReviewEcon thank you so much!

@ReviewEcon 2 жыл бұрын

You're welcome! Good luck on the exams!