Download AP® Macroeconomics

AP® Macroeconomics
Syllabus/Course expectations and guidelines
AP® Macroeconomics provides students with a thorough understanding of the principles of economics that apply
to an economic system as a whole. The course places particular emphasis on the study of national income and
price-level determination, and also develops students’ familiarity with economic performance measures, the
financial sector, stabilization policies, economic growth, and international economics. This is a one semester, 18week course, designed to prepare students for the AP Exam.
COURSE DESCRIPTION/OVERVIEW
This course aims to: 1) provide an intensive study of basic economic principles and Macroeconomics tools, and
their application to national economies; 2) instruct students on how to generate, interpret, label, and analyze
graphs, charts, and data to describe and explain economic concepts; and, 3) further develop critical thinking skills
while examining different perspectives of macroeconomic economic theory. (For specific areas see Course
Plan/Outline below.)
Course Materials include:





McConnell, Campbell R. and Stanley L. Brue. Economics, Principles, problems, and policies, 17th ed. New
York: McGraw-Hill/Irwin, 2008.
Selected articles from the New York Times, Los Angeles Times, Wall Street Journal, and other periodicals.
Economics USA, video series.
Other selected media including news items relevant to the course topics.
Instructor handouts including data in a variety of forms and sources for analysis and interpretation.
Student performance will be evaluated in the following areas: chapter quizzes, homework, participation, final
exam. Weekly chapter quizzes will include both multiple choice and free-response questions. All students in this
course are expected to register and take the AP® Exam.
COURSE PLAN/OUTLINE
The course consists of six basic units. An outline of course objective topics, required readings, and “graphs of
focus” is included below. Relevant news items will also be discussed on a weekly basis.
UNIT I. BASIC ECONOMIC CONCEPTS—2-3 weeks
Topic A:
Includes:
Reading:
Graph:
The economic perspective: limits, alternatives, choices, trade-offs
Scarcity, choice, and opportunity costs; marginal analysis; macro and micro; factors of production
Chapter 1, pages 4-11
Graphs and their meaning (pp21-25)
Topic B:
Reading:
Graph:
Production possibilities model
Chapter 1, pages 11-18
Production possibilities curve (frontier) (p12)
Topic C:
Includes:
The Market System and the Circular Flow
Command v. Market Systems, Characteristics, Fundamental Questions, Invisible Hand, and the
Circular flow model
Chapter 29, pages 29-41
Circular Flow (p39)
Reading:
Key diagram:
Topic D.
Reading:
Graphs:
Demand, supply, and market equilibrium
Chapter 3, pages 45-61
Demand and supply curves showing equilibrium; demand and supply curves showing shifts in
demand/supply (pp45-61)
Topic E:
Includes:
Reading:
Graphs:
The United States in the Global Economy
Overview of comparative advantage, absolute advantage, specialization, and exchange.
Chapter 5, pages 85-99
U.S trade and GDP (p86), Market for yen (p93)
UNIT II.
MACROECONOMIC ISSUES AND MEASURING ECONOMIC PERFORMANCE—2-3 weeks
Topic A:
Includes:
Reading:
Graphs:
Measuring Domestic Output and National Income Gross Domestic Product
National income accounts, Circular flow, Gross Domestic Product; Components of gross domestic
product; Real versus nominal gross domestic product
Chapter 6, page 106-121
U.S. domestic output and the flows of expenditure and income (p155)
Topic B
Includes:
Reading:
Diagrams:
Economic growth and the business cycle
Growth and the business cycle, recession, trough, recovery, unemployment, inflation
Chapter 7, pages 125-129
Annual growth rates (p127), Business Cycle (p127)
Topic C:
Includes:
Reading:
Graphs:
Unemployment
Definition and measurement; Types of unemployment; Natural rate of unemployment
Chapter 7, pages 129-134
GDP and unemployment (p132)
Topic D:
Includes:
Reading:
Graphs:
Inflation measurement and adjustment
Price indices; Nominal and real values; Costs of inflation
Chapter 7, pages 134-141
Inflation in five nations (p135), U.S. Annual inflation rates (p136)
Topic E:
Includes:
Reading:
Graphs:
Basic Macroeconomic relationships
Income-Consumption and Income-Savings, Interest Rate-Investment, Multiplier Effect
Chapter 8, 147-162
Consumption and disposable income (p147), Consumption and Savings schedules (p149),
Investment demand curve (p155)
UNIT III.
MACROECONOMIC MODELS AND FISCAL POLICY—2-3 weeks
(Includes National Income and Price Determination)
Topic A:
Includes:
Reading:
Graphs:
Aggregate Expeditures Model
Consumption and Investment Schedules, Equilibrium GDP, Other features, Adding trade
Chapter 9, pages 167-181
Equilibrium GDP (p170), Net exports and equilibrium GDP (p174), Government spending and
equilibrium GDP (p177), Taxes and equilibrium GDP (p174), Recessionary and inflationary
expenditure gaps (p180)
Topic B:
Includes:
Reading:
Graphs:
Aggregate demand
Determinants of aggregate demand, Multiplier and crowding-out effects
Chapter 10, pages 188-191
Aggregate demand curves (p188, p190)
Topic C:
Includes:
Reading:
Graphs:
Topic: D:
Includes:
Reading:
Graphs:
Aggregate supply
Short-run and long-run analyses, Sticky versus flexible wages and prices, Determinants of
aggregate supply
Chapter 10, pages 192-196
Aggregate supply curves (p192, p193, p194)
Macroeconomic equilibrium
Real output and price level, Short and long run, Actual versus full-employment output, Economic
fluctuations
Chapter 10, pages 196-20
The equilibrium price and equilibrium real GDP (p197), AD and demand pull inflation (p198), AD
and recession (p198), AS and cost-push inflation (p200), Growth, full employment, and relative
price stability (p200), Relationship of the AD curve and the Aggregate Expenditures Model (p205207)
Topic E:
Includes:
Reading:
Graphs:
Fiscal policy, Deficits, and Debt
Fiscal policy and AD-AS Model, Problems, Deficit spending, Public debt, Crowding out-effect
Chapter 11, pages 209-222
Expansionary and Contractionary fiscal policies (p209, p210), Built-in stability (p212),
Standardized deficits (p214), Investment demand and crowding-out (p222)
UNIT IV.
MONEY, BANKING, AND MONETARY POLICY (Financial Sector)—2-3 weeks
Topic A:
Includes:
Reading:
Graphs:
Money, banking, and financial markets
Definition of financial assets: money, stocks, bonds; Time value of money (present and future
value), Measures of money supply
Chapter 12, pages 229-240
World’s 12 largest financial institutions
Topic B:
Includes:
Reading:
Graphs:
Money creation
Banks and creation of money, Money demand, Money market, and Loanable funds market
Chapter 13, pages 245-254
Expansion of the money supply by commercial banking system (p253)
Topic C:
Includes:
Reading:
Graphs:
Central bank and control of the money supply
Tools of central bank policy, Quantity theory of money, Real versus nominal interest rates
Chapter 14, pages 259-279
Demand and supply of money, and equilibrium interest rate (p260), Monetary policy and
equilibrium GDP (pp270-271), The AD-AS Theory of price level, real output, and stabilization
policy (pp276-277)
UNIT V.
OTHER LONG RUN PERSPECTIVES AND MACROECONOMIC DEBATES—2-3 weeks
Topic A:
Includes:
Inflation, Unemployment, and Stabilization Policies
Inflation and unemployment, types of inflation, Demand-pull inflation, Cost-push inflation, The
Phillips curve: short run versus long run, Role of expectations
Chapter 15, pages 286-299
Aggregate demand/aggregate supply model (p287, p288, p289, p290), Phillips curve (p291,
p294), Laffer curve (p296)
Reading:
Graphs:
Topic B:
Includes:
Reading:
Graphs:
Economic Growth and Productivity
Investment in human capital, Investment in physical capital, Research and development, and
technological progress, Growth policy
Chapter 16, pages 303-317
Economic growth and the production possibilities curve (p303), Production possibilities and longrun AS (p305)
Topic C: Disputes over Macro theory and policy
Includes:
Fiscal and monetary policies (Demand-side effects, Supply-side effects, Policy mix, Government
deficits and debt)
Reading:
Chapter 17, pages 321-334
Graphs:
Classical and Keynesian view of the macroeconomy (p321), The real-business-cycle theory
(p325), New classical view of self-correction (p327), rationale for monetary rule (p331)
UNIT VI.
INTERNATIONAL TRADE AND FINANCE—2-3 weeks
Topic A:
Includes:
Reading:
Graphs:
International Trade: the economic basis
Key Facts, Net exports and capital flows, Comparative Advantage
Chapter 35, pages 676-682
Production possibilities for U.S. and Brazil (p678), Trading possibility lines and the gains from
trade (p680)
Topic B:
Reading:
Graphs:
Supply and Demand Analysis of Exports and Imports
Chapter 35, pages 682-685
U.S. and Canadian export supply and import demand (pp683-684), Equilibrium world price and
Quantity of exports and imports (p685)
Topic C:
Includes:
Reading:
Graphs:
Trade Barriers and protection.
Impact and cost of tariffs and quotas, the case for protection, WTO
Chapter 35, pages 685-692
Effects of a protective tariff or an import quota (p686)
Topic D:
Includes:
Reading:
Graphs:
Balance of payments accounts
Balance of trade, Current account, Capital and financial account
Chapter 36, pages 697-700
U.S. Trade Balances in Good and Services (p699)
Topic E:
Includes:
Foreign exchange market
Demand for and supply of foreign exchange, Exchange rate determination, Currency appreciation
and depreciation, Links to financial and goods markets
Chapter 36, pages 700-714
The market for foreign currency (p702), Adjustments under flexible exchange rates and fixed
exchanged rates (p703), U.S. Trade deficits (p711)
Reading:
Graphs: