Exam Day: Final Load

Every graph, every formula, both chains, five traps. In deployment order. Scan, don't read.

1The seven graphs

Production

Y vs N

Y N slope=MPN

Concave. A↑ or K↑ rotates it up, steeper at every N (dashed).

Labour

w vs N

w N N S N D

Clearing = dot. Sticky = wage stuck above w*, employment read off N^D, red bar = unemployment.

Goods (closed)

r vs S,I

r S,I S D I D

S*=I* at r*. G lives inside S^D = Y − C − G.

Asset

r vs M/P

r M/P M/P L(·)

M/P vertical. Axis is r, not i.

MPKf inset

cost vs K

cost K uc MPK f

uc=(r+d)p K. Tax: MPK^f = uc/(1−τ). Sets K*.

Goods (open)

r vs NX, S−I

r NX,S−I 0 S D−I D NX D

NX* = S*−I*. Can sit left of zero = deficit.

FX market

e_nom vs D

e_nom D D D D S

e_nom = foreign per 1 CAD. Up = appreciate.

2Formulas that compute marks

National accounts GDP = C + I + G + NX    GNP = GDP + NFP    CA = NX + NFP S = Y + NFP − C − G = I + CA Prices π = ΔP / P(earlier)    deflator = nominal / real    r ≈ i − π Labour LF = E + U    u-rate = U / LF    natural = frictional + structural MPN = w  (hiring rule) payroll tax τ: MPN = (1+τ)w   pivots N^D at the N-intercept income tax t: N^S = (1−t)w   pivots from the origin Investment uc = (r+d)·p_K I^D = K* − K_t + d·K_t    ← d appears TWICE Money M/P = L(Y, r+πᵉ) mm = (cu+1)/(cu+res)    M = mm · BASE Search & inequality M(U,V) = δ·E    U* = LF − E* Gini = 1 − 2·(area under Lorenz) Policy Taylor: i = π + 0.02 + 0.5y + 0.5(π − 0.02)   → slope 1.5

3The two near-certain chains

G↑, sticky wage
S D ← left  →  r*↑, S*↓  →  AD>AS  →  P↑  →  M/P ← left
W stuck  →  W/P↓  →  down along N D  →  N↑, U↓, Y↑

Feedback (Y↑ nudges S D and L partly back) never overrides the initial move.

A↓, market clearing
MPN↓  →  N D ← left  →  w*↓, N*↓  →  Y*↓  →  S D ← left  →  r↑ (goods pins it)
P↑  →  M/P↓ (→r↑) vs L↓ (→r↓)  →  asset alone ambiguous  →  M/P dominates

4Ambiguity setups: tested twice on A2

d↑: uc channel → K*↓ → I D left. BUT the d·K_t term → I D right. Ambiguous, draw 3 cases.
FX, 4 channels: Y_foreign↑→D D↑(e↑) · r_domestic↑→D D↑(e↑) · r_foreign↓→D S↓(e↑) · Y_domestic↑→D S↑(e↓). Ambiguous: 3-case graph.

5Five traps

  1. Circle exactly one option. Hedging is penalized: "ambiguous" is the answer only when channels genuinely oppose.
  2. π divides by the earlier P. Always.
  3. "Temporary" MPK shock → no I^D shift. MPK^f itself is untouched.
  4. mm is (cu+1)/(cu+res), never 1/res. 1/res only when cu=0.
  5. Numbers come out clean. Ugly arithmetic = an error upstream. Graph marks are separate, label axes, curves, both equilibria, always.
First thing when the paper opens, write your convention corner e_nom = foreign currency per 1 CAD  ·  W/P falls when P rises (wage stuck)  ·  r is the asset-market axis, not i.

Then run the Algorithm, steps 1–5, on every single question. You've drilled this. Go collect the marks.