Thursday, December 24, 2009

Nominal and Real Interest Rates for AP Macroeconomics

Summary: Peggy Pride's article.

The article is here.

Teachers and students often have questions about labeling the vertical axis on the liquidity preference and loanable funds graphs. In this article, Ms. Pride answers those questions.

In the loanable funds market, there is always a debate on whether to move the supply or demand curve when the government spends. I believe I have an easy answer that will eliminate all debate and students can easily remember and interpret policy. Look for an EconEdLink lesson and a YouTube video on this subject.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School. Mr. Fladlien believes that asymmetrical information in gift giving results in market failure.


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