Macro 2012 FRQ #1: PPC, OMO, Money Market, and Balance of Payments

The video tutorial discusses a macroeconomic question from 2012, focusing on a fictional country, Rankinland, which is in a recession. It covers drawing the production possibilities curve, the use of expansionary monetary policy through open market operations, and the effects on the money market graph. The tutorial explains how these policies impact the real interest rate, GDP, current account deficit, and currency value. The video also provides a point breakdown for each part of the question.

Discuss the relationship between an increase in GDP and the current account deficit.

What happens to a country's currency when there is an increase in imports due to rising GDP?