AP Macroeconomics - Garden City Public Schools

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AP Macroeconomics


Course Syllabus


AP
®

Macroeconomics course is designed as an initial college
-
level course in macroeconomics
and as foundation for possible future study in economics or business. The course

emphasizes
economic principles

as applied to th
e economy as a whole. Lessons include an analysis of
national

income and its components, economic indicators, inflation and unemployment, money
and banking, stabilization policies, and the United States and world trade.
Students will learn to
analyze gra
phs to determine effects of economic policy.

In May, students will take the Advanced Placement exam given by the College Board.
Successful achievement on the

exam
allows the student to earn college credit
.


Fundamental Objectives


Help students master the

principles essential for understanding the economizing problem,
specific economic issues, and the policy alternatives.


Help the student understand and apply the economic perspective and reason accurately and
objectively about economic matters.


Promote a

lasting student interest in economics and the economy.


Textbook


Economics: Principles, Problems, and Policies, 17/e

Campbell R. McConnell, University of Nebraska

Stanley L. Brue, Pacific Lutheran University

ISBN:

0073126632

Copyright year:

2008



Supple
ments


Morton, John.
Advanced Placement Economics:

M
acr
oe
conomics Student

Activities,
2003,

3
rd

edition


Additional R
esources


Local newspaper articles

Magazine articles

The Economist
,
Business Week
, Federal Reserve publications, the
Wall Street Journal
,

the
New
York Times
.

Professional journals


Videos:


Economics U$A


Economics, 3rd Ed

Timothy Taylor


"Commanding Heights: The Battle for the World Economy"
(
2002
)


Summer Reading
s

Naked Economics


I Pencil


Federal Reserve publications


Homework

Assigned throughout the year to correspond with the unit of study

-

assigned readings from textbook

-

various questions, problems, graphing, and

activity worksheets distributed throughout the year

-

additional readings on current issues in economics as they b
ecome available from magazines,
newspapers
, and web sites




Course Outline


Unit 1: Basic Economic Con
c
epts

(8
-
12%)



(4 weeks)


McConnel
l

and Brue Chapters

1
-
5


Morton Student Activities 1
-
8


I.
Basic Economic Concepts


A.

Scarcity: What is it? Why is it so important to economic thought?


B.

Opportunity Cost: Define and compute it. Why can it never be avoided?


C.

Production Possibilitie
s: Construct and interpret production possibilities




schedules, and graphs; relate production possibilities curves to the issues




of scarcity, choice and cost.
Explain the shape of the PPC



D.

Comparative Advantage

and Absolute Advantage
: Defi
ne
and calculate


E.

Economic
Questions




1.

Answering the questions: What to produce? How to produce? For




whom to produce?



2.

Define ways societies de
termine allocation and efficiency

II.
Demand,

Supply,

and Price Determination


A.

Demand: Def
ine and illustrate demand through schedules and graphs.



1. Distinguish between change(s) in quantity demanded and change(s)





in demand.



2. Examine the inverse relationship existing between quantity demanded and





price. Evaluate the
Law of Demand.



3.

Identify and explain the variables that cause a change in demand.



4.

Illustrate graphically a change in demand versus a change in quantity




demanded


B.

Supply: Define and illustrate supply through schedules and graphs.



1. D
istinguish between change(s) in quantity supplied and change(s) in supply.



2. Examine the direct relationship existing between quantity supplied and price.




Evaluate the Law of Supply.



3.

Identify and explain the variables that cause a change i
n supply.



4.

Illustrate graphically a change in supply versus a change in quantity





supplied.


C.

Equilibrium Price and Quantity: Define and illustrate equilibrium through schedules



and graphs.



1.

Define and illustrate surpluses and shor
tages.



2.

Define the effects of surpluses and shortages on prices and quantities.




3.

Int
erpret the effects of a price f
loor and price ceiling on equilibrium price and





quantity.



4.

Introduction to market failures: lack of competition, extern
alities, and public





goods.


III. Graphs



A. Production possibilities curve


B. Demand and supply curves showing equilibrium


C. Demand and supply curves showing shifts in demand and supply


Note: Proper graphing techniques (generating, labeling, et
c.) will be taught at


this stage and will be reinforced throughout the year.






IV. Assessment: Two (2) days


A. Day 1: Full period multiple choice exam


B. Day 2: Free Response Question



Unit 2:

Measurement of Economic Performance
(12
-
16%)

(4 weeks)



McConnell and Brue Chapters
6,
7, 8

Morton Student Activities 9
-
18


I
.
Gross Domestic Product and National Income Concepts


A.

Measuring GDP,

Four
-
Sector Circular Flow Model,

and Flow v
ersus Stock



1.

Expenditure approach
[C+I+G+(X
d
-
Im
)] where
:




C

=
Consumption
Spending




I =

I
nvestment

Spending




G
=
Government
Spending

and Investment




Xn (
X
d
-
I
m) = N
et Exports

(exports


imports)



2.

Income approach (W+R+I
+P) where
:




W =

Compensation of Employees




R =

Rental Income of Persons




I =

Net I
nterest




P =

Profits (Non
-
income adjustments)


B
.

Problems with calculating GDP: Non
-
market transactions, distribution, kind




and quality of products.


C
.

C
hanging Nominal GDP (
GDP
n
)

to real GDP (
GDP
r
).





1.
How and why?




2. GDP deflator
price index


D
.

Other national accounts: net national product (NNP), national income (NI),




p
ersonal income (PI), and disposable income (DI).


II
.
Inflation


A.

The

Meaning and Measurement of Inf
lation


B. The Consumer Price Index (CPI) and How I
t Is Computed


C.

Problems with the CPI


D.

Other Indexes: Producer Price Index


E.

Consequences of Inf
lation: shrinking incomes, changes in wealth, effect



on interest rates


F.

Demand
-
Pull and Cost
-
Push Inf
lation


III.
Unemployment and Business
Cycles


A.

T
he four phases of the business cycle


B.

Total Spending and How It Affects the Business Cycle


C.

Unemployment: Defined


D.

Problems with the Unemployment Rat
e
: Who is counted and who isn’t?


E.

Types of Unemployment



1.
Frictional, stru
ctural, cyclical, seasonal



2.

Which
will
affect the unemployment rate

and why
?


F.

Full Employment

(Natural Rate of Unemployment)
: What is it? What are the





i
mplications if achieved?


G.

The GDP Gap: Explaining lost potential


IV. Graphs

/ Di
agrams / Formulas


A.
Circular Flow


B.
Phases of the Business Cycle


C. GDPn, GDPr, GDP deflator price index, CPI, rate of inflation





V. Assessment: Two (2) days


A. Day 1: Full period multiple choice exam


B. Day 2: Free Response Question



Unit 3:
Na
tional Income and Price Determination

(10
-
15%)

(5 weeks)


McConnell and Brue Chapters 9, 10
, 11

Morton Student Activities
19
-
33


I: Aggregate Demand and Supply; National Income and Price Determination


A.

Aggregate Demand Curve: Reasons for Its Shape



(Real balances effect,

Interest rate effect, Net export effect)


B.

Determinants of Aggregate Demand


C.

Aggregate Supply Curve
(SRAS and LRAS)



1. Classical view,

Keynesian view



2
.

Changes in equilibrium price and quantity with the three ranges


D.

Determinants of Aggregate Supply


E.

Macroeconomic equilibrium


II. Fiscal Policy/Public Sector


A.

Discretionary Fiscal Policy



1. Changes in government spending
and tax rates



2
. Balanced
-
budget multiplier


B.

Supply
-
Side Policies


D.

Government S
ize and Growth



1. Financing budgets



2. Government expenditure patterns


E.

Types of Taxation



(Progressive, Proportional,

Regressive
)


F.

Federal Deficits and the National Debt



1.

The Federal Budget
-
Balancing Act



2.

Should we worry about de
ficits or the debt?


III.
Aggregate Expenditure,

the Keynesian Theory: An Introduction


A.

The Role of the Consumption Function


B.

Marginal Propensities to Consume and Save


C.

Why the Consumption Function Shifts and How It Affects Aggregate Demand


D.

The Role of the Investment Function


E.

Why is Investment Demand Unstable?



(Expectations,

Technological change,

Capacity utilization)


F.

Investment as an Autonomous Expenditure


G.

Graphing the Aggregate Expenditure Function


H
.

The
Keynesian

Mu
ltiplier: the math and its effects


I.
Reces
sionary and Inf
lationary Gaps


IV. Graphs / Diagrams / Formulas


A. Investment Demand curve


B. Aggregate Demand, Aggregate Supply, Long Run Aggregate Supply


C. Keynesian Cross


D. MPC, MPC, Keynesian Multiplie
r





V. Assessment: Two (2) days


A. Day 1: Full period multiple choice exam


B. Day 2: Free Response Question



Unit 4: Financial Sector

(15
-
20%)






(4 w
eeks)


McConnell and Brue Chapters
12
-
14W

Morton Student Activities 34
-
42


I. Money, banking, and
financial markets


A. Three Functions of Money


B. What Stands Behind the U.S. Dollar?


C. The Three Money Supply Definitions



1. M1: most narrowly defined money supply



2. M2: adding near monies to M1



3. M3: adding large time deposits to M2


D.
Financial assets: Money, Stocks, Bonds



1. Time value of money (present and future value)



2. Banks and creation of money

(balance sheets)



3. Money demand



4. Money market



5. Loanable funds market


E. The Money Multiplier: Theory versus reality (po
tential expansion of the money
supply)


II. The Federal Reserve System (FED) and Monetary Policy


A. Origins and organizational structure


B. Powers of the FED



1. controlling the money supply



2. clearing checks



3. supervising and regulating the b
anks



4. loaning currency to banks



5. acting as the bank for the U.S. government


C. Tools of the FED
to change the money supply



1. open market operations



2. discount rate



3. reserve requirement


D
.

Monetary Policy Shortcomings



1. Money mu
ltiplier inaccuracies



2. Lags in policy effects


E
.

Monetary Policy



1.

The demand for money and how it may affect interest rates



2.

How monetary policy affects prices, output, and employment



3.

The Monetarist view of money (MV=PY)



4.

A compa
rison of views: Monetarist, Keynesian and classical economists


III. Graphs / Diagrams / Formulas


A. Money Market


B. Loanable Funds


C. Interest rates / Investment Demand


D. Money Multiplier, Reserve Ratio, Excess Reserves





IV. Assessment: Two (2) da
ys


A. Day 1: Full period multiple choice exam


B. Day 2: Free Response Question



Unit 5
: Inflation, Unemployment, and Stabilization Policies: Monetary and



Fiscal Policies Combinations in the real world

(20
-
30%)

(3 weeks)


McConnell and Brue Chapter
s
15,
16, 17

Morton Student Activities 43
-
46,
48


I. Monetary and Fiscal Policy


A. Monetary and fiscal policy working together


B. Loanable funds market and relationship to the money market


C. “Crowd
ing out” and the interest rate effects
of fiscal policy


II. Inflation and unemployment


A. Types of inflation



1. Define and graph demand
-
pull inflation



2. Define and graph cost
-
push inflation


B.
What is the Phillips Curve?



1. Inflation and unemployment relationship



2. In the short run



3. In the lo
ng run


C. Rational Expectation Theory


III. Reasons for disagreements among economists about macroeconomic policies and effects of


the policies


IV. Graphs

(revisiting some graphs from previous units with new ones)


A. Aggregate demand / aggregate
supply model


B. Money market


C. Interest rates / Investment demand


D. Phillips curve



IV. Assessment: Two (2) days


A. Day 1: Full period multiple choice exam


B. Day 2: Free Response Question





Unit 6
: Economic Growth and Productivity

(5
-
10%)


(1 we
ek)


McConnell and Brue Chapter

24

Morton Student Activities 47


I. Raising Productivity: Real Output and Capital Formation


A.

Human Capital Formation


B.

Physical Capital Accumulation


C.

Research and Development, Technological Progress


D.

Public Poli
cy and Long
-
Run Economic Growth


II. Graphs

(revisiting some graphs from previous units)


A. Productions possibilities curve


B.

Aggregate demand / aggregate supply model


III. Assessment: Two (2) days


A. Day 1: Full period multiple choice exam


B. Day 2:

Free Response Question



Unit 7: International Trade and Finance

(10
-
15%)


(3 weeks)


McConnell and Brue Chapters

5, 35, 36

Morton Student Activities 49
-
55


I
.
International Trade and Finance


A.

Why Nations Trade at All


B.

Comparative and Absolute A
dvantage


C
. Free Trade v
ersus Protectionism



1.

Arguments for free trade



2.

Arguments against free trade


D.

The Balance of Payments



1.

Current account



2.

Capitol account



3.

International debt of the United States


E.

Exchange Rates



1.

Supply and demand for foreign exchange



2.

Current fluctuations




a.

appreciation and depreciation




b.

graphing currency changes


II
.
Comparative Economic Systems


A. Basic Types of Economic Systems



1.

Traditional,
command, and market economies

-

defined and analyzed



2.

The mixed economy of today



3.

Capitalism and socialism: basic tenets



4.

Comparing the systems


B.

Comparing Developed and Developing Countries



1.

Classifying countries by GDP per capita




a.

problems with classific
ation



2.

How to sustain economic growth in developing countries




a.

national resources




b.

policy making



3.

Implications for a changing world


III. Graphs



A.
Exchange rates


B. International trade



IV. Assessment: Two (2) days


A. Day 1: Full

period multiple choice exam


B. Day 2: Free Response Question



Unit 8:
AP Exam Review

(3 weeks)


I. Practice exam


A. Multiple Choice divided over 2 days


B. Free Response Questions


2 days



1. Day 1
-

sample #1
format

question



2. Day 2


sample #2

and #3
format

questions


II. Review by unit
: recalling topics, graphs, and formulas by unit


III. Student created PPTs will cover major concepts


IV. Review Book(s)