Download Advanced Placement Macroeconomics

Advanced Placement Macroeconomics
Instructor: Mr. Eli Tella
Phone: (956) 514-2100
Office: A-2
email: [email protected]
Office Hours: 3:00-3:50
Description:
Economics describes the nature of an economy or an economic system and
investigates economic problems with the objective of offering solutions. The word
economy is derived from the ancient Greek oikos (house) and nemein (to manage)
oikonomia and literally means household management. Macroeconomics will introduce
students to economic principles in a broader sense applying those concepts to economic
systems as a whole. This college level course includes the study of different economic
principles including basic economic concepts, measurement of economic performance,
national income and price determination, financial sector, inflation, unemployment,
stabilization policies, economic growth, productivity, open economies, international
trade, and finance. Throughout the course students will analyze economic decisions made
by policy makers and use critical thinking skills to generate, interpret and label graphs
and charts. The course is one semester long and every student is expected to take the AP
exam in May. Students that pass the examination will receive college credit.
Textbook:
Mankiw, N. Gregory. Principles of Macroeconomics, 5th ed., (Ohio: South-Western
Cengage Learning 2008).
Additional Readings and Materials:
Morton, John. Advanced Placement Economics, 3rd ed. (New York: National Council on
Economic Education 2005).
Wall Street Journal
A variety of financial web pages
Local newspaper articles
Course Planer
Unit 1 Basic Economic Concepts
A. Scarcity and Opportunity Costs
B. Production Possibilities Frontier
C. Interdependence and the Gaines from Trade
D. Demand, Supply, and Market Equilibrium
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A. Scarcity and Opportunity Costs
The limited nature of society’s recourses and the fundamental economic problem facing
all societies that results from a combination of scarce resources and people’s virtually
unlimited wants.
Lesson 1: Introduction to course: expectations and requirements, study of economic
principles and basic economic concepts. Analyze and discuss chapter 1 Ten Principles of
Economics. Have the students read and study Chapter 2 for homework.
Lesson 2: How people make decisions, how people interact, and how the economy works
review
Lesson 3: Introduction of the economic way of thinking, class discussion on scarcity and
opportunity costs.
Lesson 4: Language of economics and introduction of the Circular-Flow Diagram: a
schematic representation of the organization of the economy. Student Graph practice.
B._Production Possibilities Frontier
Graph that shows the combinations of output that the economy can possibly produce
given the available factors of production and the available production technology.
Lesson 5: Production Possibilities Frontier practice. Analyzing trade offs and efficiency.
Quiz on Principles of economics and economic language.
Lesson 6: Economic Model practice, graphing review (single variable, two variables,
demand curve, slope, cause and effect). Read Chapter 3 for homework.
Lesson 7: Focus exercise discussion on productive and allocative efficiency. Review of
Chapters 1 and 2, Chapter Test.
Key concepts: scarcity, economics, efficiency, equality, opportunity cost, rational
people, marginal changes, incentive, market economy, property rights, market failure,
externality, market power, productivity, inflation, and business cycle, circular flow
diagram, production possibilities frontier, microeconomics, macroeconomics, positive
statements, normative statements.
C. Interdependence and the Gains from Trade
Characteristic of a society (and increasingly that of the world) with a high degree of
division-of-labor where people depend on other people to produce most of the goods and
services required to sustain life and living.
Lesson 8: Study of specialization and trade, absolute advantage, comparative advantage,
and discussion on international trade.
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Lesson 9: The price of trade and applications of comparative advantage
Lesson 10: Chapter 3 review and chapter quiz
Key concepts: absolute advantage, opportunity cost, comparative advantage, imports,
exports
D. Demand, Supply, and Market Equilibrium
The terms supply and demand refer to the behavior of people as they interact with one
another in competitive markets
Lesson 11: Introduction to the Market Forces of Supply and Demand, study of
competition. Question and Answer session on the law of demand and law of supply.
Lesson 12: Study of the demand curve and the relationship between price and quantity
demanded. Shifts in the demand curve.
Lesson 13: Continuum of demand curve lesson, graph practice (demand curve model.)
Lesson 14: Study of the supply curve and the relationship between price and quantity
demanded. Shifts in the supply curve.
Lesson 15: Supply Curve lesson continued, graph practice (supply curve model.)
Lesson 16: Equilibrium, Supply and Demand Together, student graph practice.
Lesson 17: Study of elasticity and its applications, graph analysis
Lesson 18: Unit Review and Unit Test
Key concepts: market, competitive market, quantity demanded, law of demand, demand
schedule, demand curve, normal good, inferior good, substitutes, complements, quantity
supplied, law of supply, supply schedule, supply curve, equilibrium, equilibrium price,
equilibrium quantity, surplus, shortage, law of supply and demand. Elasticity, total
revenue,
Unit Two Measurement of Economic Performance
A. Measuring a Nations Income
B. Inflation, Measuring the Cost of living
C. Identifying Unemployment
A. Measuring a Nations Income
The economy’s income and expenditure, business cycle (circular flow diagram) and
the components of gross domestic product. Study of a variety of analysis regarding
economic performance
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Lesson 19: The measurement of Gross Domestic Product and its components. GDP: the
market value of all final goods and services produced within a country in a given period
of time. Introduction of GDP equation (y = c + i + g + (x-m) )
Lesson 20: The study of Real versus nominal GDP and international differences in GDP
and the quality of life. AP free response question practice.
Lesson 21: Review of GDP and Chapter Quiz.
B. Inflation, Measuring the Cost of Living
An increase in the overall level of prices in the economy
Lesson 22: Measuring the cost of living, Inflation and Inflation rate
Lesson 23: The GDP Deflator versus the Consumer Price Index and Dollar Figures in
Different Times Exercise.
Key Concepts: microeconomics, macroeconomics, gross domestic product (GDP),
consumption, investment, government purchases, net exports, nominal GDP, real GDP,
GDP deflator, consumer price index, inflation rate, indexation, nominal interest rate, real
interest rate
C. Identifying Unemployment
Unemployed: state of working for less than one hour per week for pay or profit in a nonfamily owned business, while being able and having made an effort to find a job during
the past month.
Lesson 24: Measurement of Unemployment, case study on minimum wage
Lesson 25: Introduction to Okun’s Law. Study Theory of Efficiency Wages
Lesson 26: Unit Two Review and Unit Two Test
Key Concepts: labor force, unemployment rate, labor-force participation rate, natural
rate of unemployment, job search, efficiency wages, cyclical unemployment, frictional
unemployment, job search.
Unit Three Short-Run Economic Fluctuations
A. Aggregate Demand
B. Aggregate Supply
C. Macroeconomic Equilibrium
A. Aggregate Demand
The total quantity of goods and services demanded at different price levels.
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Lesson 27: Explaining short-Run Economic Fluctuations
Lesson 28: Introduction of the Aggregate Demand curve; the hypothetical curve showing
different levels of real GDP that could be purchased at various price levels.
B. Aggregate Supply
The value of goods and services that all firms would produce in a specific period of time
at various price levels
Lesson 29: Introduction and study of Aggregate Supply and its determinants.
Lesson 30: Study of the Aggregate supply Curve; the hypothetical curve showing
different levels of real GDP that could be produced at various price levels.
Lesson 31: Comparison of the Sticky-Wage Theory, Sticky-price Theory, and
Misperceptions Theory.
C. Macroeconomic Equilibrium
Level of real GDP consistent with a given price level; intersection of aggregate supply
and aggregate demand.
Lesson 32: Study of the Multiplier Effect.
Lesson 33: Keynesian Economics Review
Lesson 34: Chapter 21-22 Review and Exam
Key concepts: recession, depression, model of aggregate demand and aggregate supply,
aggregate demand curve, aggregate supply curve, natural rate of output, stagflation,
theory of liquidity preference, fiscal policy, multiplier effect, crowding-out effect,
automatic stabilizers.
Unit Four Financial Sector
A. Financial Institutions
B. The basic Tools of Finance
C. The Monetary System
A. Financial Institutions
Institutions which collect funds from the public and places them in financial assets, such
as deposits, loans, and bonds, rather than tangible property
Lesson 35: Introduction to the financial institutions in the U.S economy
Lesson 36: Study of Saving and Investing money market equilibrium
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Lesson 37: Introduction to the Market for Loanable Funds study of bond market
equilibrium.
Lesson 38: Graph practice Money Market and Loanable funds market
Key concepts: financial system, financial markets, bond, stock, financial intermediaries,
mutual fund, national saving, private saving, budget surplus, budget deficit, crowding
out.
B. The Basic Tools of Finance
Finance the field that studies how people make decisions regarding the allocation of
resources over time and the handling of risk
Lesson 39: Measuring the time value of money
Lesson 40: Introduction to Managing Risk
Lesson 41: Study of Asset Evaluation
Lesson 42: Chapter 14 Review and Chapter Test
Key concepts: finance, present value, future value, compounding, risk aversion,
diversification, firm-specific risk, market risk, fundamental analysis, efficient market
hypothesis, informational efficiency, random walk.
C. The Monetary System
Set of mechanisms by which a government provides money (cash) in a country's
economy. It usually consists of a mint, central bank, and commercial banks, Federal
Reserve System (FED, open market operations, and stagflation
Lesson 43: The Meaning of Money
Lesson 44: Banks and the Money supply
Lesson 45: Federal Reserve System and its tools of Monetary Control
Lesson 46: Unit Four Review and Unit Exam
Key concepts: money, medium of exchange, unit of account, store of value, liquidity,
commodity money, currency, demand deposits, fiat money, federal Reserve, central
bank, money supply, monetary policy, reserves, fractional-reserve banking, reserve ratio,
money multiplier, open market operations, reserve requirements, discount rate, federal
funds rate.
Unit Five Inflation, Unemployment, Stabilization Policies
A. Influence of Monetary and Fiscal Policy
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B. The Phillips Curve
C. Balanced Budget Multiplier
A. Influence of Monetary and Fiscal Policy
The setting of the level of government spending and taxation by government
policymakers.
Lesson 47: Study of the wealth effect, interest rate effect, and the exchange rate
Lesson 48: Study of changes in government purchases
Lesson 49: Using policy to stabilize the economy, free response question exercise
B. The Phillips Curve
A curve that shows the short-run trade-off between inflation and unemployment.
Lesson 50: Origins of the Phillips Curve, Relation between the Phillips Curve to the
Aggregate Demand and Aggregate Supply models.
Lesson 51: The Long-Run Phillips Curve, student graph practice including constructing
charts and using data.
Lesson 52: The Short- Run Phillips Curve, student free response graph practice
Lesson 53: The cost of reducing inflation
C. Balanced Budget Multiplier
Change in overall spending caused by a change in investment spending
Lesson 54: Study of the Multiplier Effect
Lesson 55: Formula for the spending multiplier
Lesson 56: Other applications of the Multiplier Effect and changes in taxes.
Lesson 57: Unit 5 review and unit test.
Key concepts: Phillips curve, natural-rate hypothesis, supply shock, sacrifice ratio,
rational, expectations, theory of liquidity preference, fiscal policy, multiplier effect,
automatic stabilizers.
Unit Six Economic Growth and Productivity
A. Economic Growth Around the World
B. Productivity: Its Role and Determinants
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C. Economic Growth and Public Policy
A. Economic Growth around the World
Sustained period during which a nation’s total output of goods and services increases.
Lesson 58: Study of Long-Run Growth
Lesson 59: Real GDP per person Analysis
B. Productivity: Its Role and Determinants
Degree to which productive resources are used efficiently; normally refers to labor, but
can apply to all factors of production.
Lesson 60: Why is Productivity Important and how productivity is determined
Lesson 61: Study of investment in Human capital
Lesson 62: Study of Investment in Physical capital
Lesson 63: Introduction of Technological knowledge
C. Economic Growth and Policy
What can government policy do to raise productivity and living standards?
Lesson 64: Saving and Investing Policies, economic policy student debate.
Lesson 65: Study of Diminishing Returns and the Catch-Up Effect.
Lesson 66: Investment from abroad, Education, and Health and Nutrition.
Lesson 67: Unit Six review and unit test.
Key concepts: productivity, physical capital, natural resources, technological knowledge,
diminishing returns, catch-up effect, labor productivity, labor force participation rate,
economies of scale, infrastructure, efficiency
Unit Seven International Trade and Finance
A. The Determinants of Trade
B. The Winners and Losers from Trade
C. Arguments for Restricting Trade
A. Determinants of Trade
Trade: To engage in the exchange, purchase, or sale of goods.
Lesson 68: The equilibrium without Trade
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Lesson 69: The world price and Comparative Advantage
B. The Winners and Losers from Trade
Lesson 70: The Gains and Losses of an Exporting/Importing Country
Lesson 71: Study of the effects of a Tariff and trade Policy
C. Arguments for Restricting Trade
Lesson 72: The jobs argument, national security argument, infant industry argument,
unfair competition argument, and the protection-as-a-bargaining-chip argument.
Lesson 73: Study of Trade Agreements and the World Trade Organization
Lesson 74: Unit Review and Unit Exam
Lesson 75: Course conclusion and Final Thoughts.
Key concepts: world price, tariff, quotas, subsidies, absolute advantage, comparative
advantage, terms of trade, domestic price, current account, balance of good and services,
trade deficit, trade surplus, capital account, official reserves, flexible exchange rates,
fixed exchange rates, depreciation, appreciation, General Agreement on Tariffs and Trade
(GATT), World Trade organization (WTO), North American Free Trade Agreement
(NAFTA)
Ultimately the goal of this course is to prepare students at the college level. The main
goal of students enrolled in this course should be that they be prepared to pass the AP
Macroeconomics Exam in May.
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