Advanced Placement Macroeconomics
Mark McCormick
2013- 2014 Academic Year
mark.mccormick@carrolltoncityschools.net
Texts:
McConnell, Campbell and Stanley Brue. Economics, 16thed. New York:McGraw-Hill, 2005.
Morton, John. Advanced Placement Economics Macroeconomics Student Activities, 3rd Ed. New York: National Council on Economic Education, 2003.
Course Objective: The AP Macroeconomics course is designed as an introductory college-level course in macroeconomics and as a foundation for possible future study in
economics or business. The reasons for taking Advanced Placement Macroeconomics are numerous. Enrolling in AP Macroeconomics allows you to challenge yourself. If
utilized correctly, you will develop the skills and study habits necessary to master college level material while insulated in a high school environment. Completing any
advanced placement course will make you more competitive because colleges and universities want students with AP course work. In addition to mastering college level
material, anothergoal of the course is to prepare you for the AP Macroeconomics Exam.
Expectations: Students expect me to be knowledgeable in the subject, as well as prepared to teach the subject each day. You expect me to be unbiased and consistent in all
aspects of my teaching as well as havegraded material completed and recorded in a timely manner. Above all, you expect me to treat you with the respect that you deserve.
Students are expected to: 1) be on time to class; 2) bring their books, paper, and a writing instrument to class; 3) participate in class discussion; therefore, comments and
questions relevant to the subject are welcome. For this reason, it is imperative that students read the assigned chapters. Students are responsible for material in the book that
may not be covered in class. Above all, I expect to be treated with the respect that I deserve.
Remember, this is an AP course and you have chosen to be here so I expect you to act accordingly. As with every society, rules, laws, or social norms regulate the behavior
of individuals and the student handbook is extensive and inclusive; however, the following three are worth emphasizing.
1.
Students have the right to learn in an environment that is conducive to doing so. Disruption of that right will not be tolerated. I consider working on assignments
from other classes and the use of electronic devices not only rude but a disruption because you are not fully engaged in the lesson. Turn off ALL electronic
equipment, (i.e., iPads, iPods, iPhones, flip phones, smart phones, Kindles, Nooks, laptops, etc.). Unacceptable behavior will be handled in accordance with the
student handbook.
2.
I implore you to do your own work. Cheating is a serious offense and the penalties are severe (refer to your Student Handbook). Please bear in mind that I have
more respect for a mediocre student who attains his or her grade honestly, than I do for a superior student who attains his or her grade dishonestly. Integrity and
honesty are two qualities that I hold in very high esteem.
3.
No WHINING! 
Assignment Policy and Grades: There will be approximately eight (8) examinations over the course of the year. Exams will be administered the first week of each month
beginning in September. A mid-term exam will be given in December and a mock AP Macro exam will be administered prior to the actual examination in order to assess
your strengths and weaknesses (yes, it does count; no, it is not optional).Each monthly exam is cumulative and will be comprised solely ofmultiple-choice questions. Free
response quizzes will be administeredperiodically to ensure that you are keeping up with the assigned reading and various assignments; each quiz is weighted one-halfof an
exam grade. There will also be six (6) Macroeconomic Unit exercise packets (affectionately referred to as Acorn Packets). Acorn Packets will be assigned at the beginning
of each unit with sections of the Acorn Packet due at various dates throughout the respective unit. Other assignments will be given throughout the semester and will be
included in the final grade as necessary. They will vary and include performance tasks, readings, practice free responses, data analysis, simulations, current events,
discussions, debates, etc. Fall Semester, exams andquizzes comprise 50 percent of the final grade; Acorn Packets and other assignmentscomprise 50 percent of the final
grade. A state mandated End-of-Course-Test for Economics will be given at a date yet to be determined and comprises 15% of the final grade of the Spring
Semester.Therefore, Spring Semester, exams and quizzes comprise 42.5 percent of the final grade; Acorn Packets and other assignments comprise 42.5 percent of the final
grade.
I give ample time to complete written assignments; therefore, the highest grade that can be attained for any assignment that is late is a 70 except in cases of excused
tardies or absences. In cases of excused tardies or absences, it is the student’s responsibility to see me about making up missed assignments or exams. If I have to refer
you for remediation, then the highest grade that can be attained on that assignment is a 50.
At the end of each semester, I have the ability to assess individual grades provided you adhere to the criteria outlined in class. This is not a school policy; therefore, ANY
consideration is at my discretion. Specific infractions that will result in NO considerationinclude but are not limited to less than an A in your work ethics grade,
remediation, chronic lateness to class, lateness of assignments, sleeping in class, the unauthorized use of any electronic equipment (especially cell phones), chronic
restroom visits, chronic disruption of class, not working on assignments, reading, working on assignments for another class, cheating, etc.Also, bear in mind that AP
Macroeconomics is a weighted course at Carrollton High School; therefore, five points will be added to the final grade at the end of each semester.
AP Macroeconomics Exam: The AP Macroeconomics exam contains of two sections. Section one consists of 60 multiple-choice questions of which you have 70 minutes
to complete. Section two consists of three free response questions (one long and two short) of which you have 60 minutes to complete. The entire exam totals2 hours and
10 minutes in length and will be administered in May. Passing the exam with a score of three, four, or five will result in college credit at almost all colleges and universities,
which will save on the cost of college in terms of both time and money (this will make your parents happy).
Course Content and Schedule of Events:
Unit One: Introduction to Economics (Six weeks)
McConnell, Chapters 1, 2, 3, 4 and 5
Basic Economic Concepts

Scarcity, choice, and opportunity cost

Production possibilities curve

Comparative advantage, absolute advantage, specialization, and exchange

Demand, supply, and market equilibrium
Concepts:
Introduction to the language of economics, micro vs. macro, positive vs. normative economics, economic decision making, pitfalls of decision making, scarcity,
opportunity costs, production possibilities, absolute advantage, comparative advantage, specialization, terms of trade, demand schedule, determinants of demand,
individual and market demand curves, supply schedule, determinants of supply, market equilibrium, shifts in supply and demand with effects on equilibrium
price and quantity.
Graphs:

Production possibilities curve (frontier)

Demand and supply curves showing equilibrium

Demand and supply curves showing shifts in demand/supply
Key Terms:
economics, factors of production—inputs, capital, microeconomics, macroeconomics, positive economics, normative economics, ceteris paribus, fallacy of
composition, scarcity, opportunity cost, model, production possibilities, constant costs, law of increasing opportunity cost, demand, law of demand, quantity
demanded, market demand, substitutes, complements, normal goods, inferior goods, supply, law of supply, quantity supplied, market equilibrium, equilibrium
price, equilibrium quantity, human capital, economies of scale, progressive tax system, regressive tax system, proportional tax system
Activities:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Morton. Advanced Placement Economics, Activities 1–8.
Introduction to the economic way of thinking, Chapters 1 and 2
Discussion of scarcity, opportunity costs
Production possibilities, Chapter 2
Production possibilities exercises/problems
Demand and problems, Chapter 3
Supply and problems
Supply, demand, and equilibrium price/quantity
Shifts in supply and demand
Supply and demand exercises/problems
Exam
Unit Two: Macroeconomic Measurement and Basic Concepts (Four weeks)
McConnell, Chapters 7, 8
National income accounts

Circular flow

Gross domestic product

Components of gross domestic product

Real versus nominal gross domestic product
Inflation measurement and adjustment

Price indices

Nominal and real values

Costs of inflation
Unemployment

Definition and measurement

Types of unemployment

Natural rate of unemployment
Concepts:
Circular flow of economic activity, inclusions and exclusions concerning gross domestic product, expenditure approach to GDP, income approach to GDP,
nominal versus real GDP, phases of the business cycle, types of unemployment, full employment, measurements of inflation, types of inflation, effects of
inflation, Okun’s Law, GDP Gap
Graphs:


Circular flow of economic activity
Phases of the business cycle
Key Terms:
Gross domestic product, intermediate goods, final goods, multiple counting, expenditure approach, income approach, personal consumption expenditures, gross
private domestic investment, net private domestic investment, government purchases, net exports, national income, consumption of fixed capital, depreciation,
personal income, disposable personal income, nominal GDP, real GDP, GDP deflator, business cycle, contraction/recession, trough, expansion/recovery, peak,
unemployment, inflation, labor force, unemployment rate, frictional unemployment, structural unemployment, cyclical unemployment, full-employment rate of
unemployment, natural rate of unemployment, inflation, Okun’s Law, Consumer Price Index, demand-pull inflation, cost-push inflation, nominal income, real
income, deflation, long-run aggregate supply curve, supply-side economics
Activities:
1. Morton. Advanced Placement Economics, Activities 9-18.
2. Components of GDP, expenditure approach, income approach (Chapter 7)
3. Macroeconomic issues: business cycle, unemployment, inflation, growth
4. Nominal and real GDP
5. Types of unemployment (Chapter 8)
6. Types of inflation
7. Determining real and nominal values using price indexes
8. Effects of inflation—short play on inflation
9. Exam
Unit Three: Macroeconomic Models and Fiscal Policy (Eight Weeks)
McConnell, Chapters 9, 10, 11, and 12
Aggregate demand

Determinants of aggregate demand

Multiplier and crowding out effects
Aggregate supply

Short-run and long-run analyses

Sticky versus flexible wages and prices

Determinants of aggregate supply
Macroeconomic equilibrium

Real output and price level

Short and long run

Actual versus full employment output

Economic fluctuations
Concepts:
marginal propensity to consume, the multiplier effect, reasons for a downward sloping aggregate demand curve, determinants of aggregate demand, aggregate
supply in the short and long run, sticky versus flexible prices and wages, determination of equilibrium output and price level, actual versus full employment,
utilization of resources, fiscal policy and the aggregate demand/aggregate supply model
Graphs:

Investment demand curve

Aggregate demand and short run aggregate supply curve

Aggregate demand and long run aggregate supply curve
Key terms:
Marginal propensity to consume, marginal propensity to save, investment, multiplier, investment schedule, leakage, injection, real balances effect, interest-rate
effect, foreign purchases effect, aggregate demand, short-run aggregate supply, equilibrium price level, equilibrium real output, expansionary fiscal policy,
contractionary fiscal policy, budget deficit, budget surplus, built-in stabilizer, discretionary policy, stagflation, aggregate supply shocks.
Activities
1. Morton: Advanced Placement Economics, Activities 20-33
2. Introduce marginal propensity as it applies to consumption and savings (Chapter 9)
3. Multiplier effect
4. Aggregate demand and its determinants (Chapter 11)
5. Short run and long run aggregate supply
6. Sticky versus flexible wages and prices, equilibrium real output and prices
7. Supply shocks, changes in aggregate demand
8. Fiscal policy (Chapter 12)
9. Consequences of fiscal policy
10. Unit Exam
Unit Four: Money, Banking, and Monetary Policy (Six Weeks)
McConnell, Chapters 13, 14, 15, and 29
Money, banking, and financial markets

Definition of financial assets: money, stocks, bonds

Time value of money (present and future value)

Measures of money supply

Banks and the creation of money

Money demand

Money market

Loanable funds market
Central bank and control of the money supply

Tools of central bank policy

Quantity theory of money

Real versus nominal interest rates
Concepts:
Functions of money, characteristics of money, measures of money, demand for money, the money market, the creation of money, loanable funds market,
organization of the Federal Reserve, tools of monetary policy, responsibilities of the Fed, quantity theory of money
Graphs:

Money market

Loanable funds market
Key terms:
medium of exchange, store of value, measure of value, M1, M2, MZM, checkable deposits, demand deposits, time deposits, legal tender, asset demand,
transaction demand, balance sheet, T-account, fractional reserve banking, Federal Reserve, reserve requirement, required reserves, excess reserves, federal funds
rate, prime interest rate, discount rate, open-market operations, monetary multiplier, nominal interest rate, real interest rate, FDIC, velocity of money, monetary
policy and the aggregate demand/aggregate supply model.
Activities:
1. Morton: Advanced Placement Economics, Activities 34–39
2. Creation of money exercise
3. Functions and types of money (Chapter 13)
4. Demand for money and money market
5. Creation of money/simulation game
6. Loanable funds market (Chapter 29)
7. Organization of the Federal Reserve (Chapter 13)
8. Tools of monetary policy (Chapter 15)
9. Consequences of monetary policy
10. Exam
Unit Five: Long-Run Perspectives and Macroeconomic Debates (Four Weeks)
McConnell, Chapters 16, 17, and 18
Fiscal and monetary policies

Demand-side effects

Supply-side effects

Policy mix

Government deficits and debts
Inflation and unemployment

Types of inflation

Demand-pull inflation

Cost-push inflation

The Phillips Curve: short run versus long run

Role of expectations

Investment in human capital

Investment in physical capital
Growth policy and Productivity
Key concepts:
Combinations of the monetary and fiscal policies and their effects, international considerations, government deficits and debts, long-run aggregate supply,
demand pull and cost push inflation, the inflation-unemployment relationship, expectations, Ingredients of economic growth, production possibilities analysis,
growth in the AD/AS model, long- and short-run analysis, labor and productivity, technological advance
Graphs:

Aggregate demand/aggregate supply model

Phillips curve

Production possibilities curve
Key terms:
Crowding-out effect, net export effect, short run Phillips Curve, long run Phillips Curve, disinflation, Laffer Curve, supply-side economics, classical view,
Keynesian view, monetarism
Activities
1. Morton: Advanced Placement Economics, Activities 43-48.
2. Fiscal and monetary policies
3. Government budget deficits and debts (Chapter 18)
4. Short-run and long-run supply curve (Chapter 16)
5. Short run and long run Phillips Curve
6. Expectations
7. Ingredients for growth (Chapter 17)
8. Production possibilities and AD/AS analysis
9. Growth from labor productivity and technological advance
10. Macroeconomic implications
11. Exam
Unit Six: International Economics (Four Weeks)
McConnell, Chapters 6, 37, and 38
Balance of payments accounts

Balance of trade
Current account

Capital account
Foreign exchange market

Demand for and supply of foreign exchange

Exchange rate determination

Currency appreciation and depreciation
Net exports and capital flows
Links to financial and goods markets
Concepts:
United States and world trade, absolute and comparative advantage, balance of payments, foreign exchange markets, implications of foreign trade, effects of
domestic fiscal and monetary policies on capital flows and foreign exchange markets, use of resources, decision and policy making
Graphs:

Production possibilities

Foreign exchange market
Key terms:
tariffs, quotas, subsidies, absolute advantage, comparative advantage, terms of trade, world price, domestic price, current account, balance on goods 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)
Activities:
1. Morton: Advanced Placement Economics, Activities 2, 49–55
2. Absolute and comparative advantage, terms of trade (Chapter 6)
3. The United States and world trade/barriers to trade (Chapters 6 and 37)
4. Absolute and comparative advantage
5. Balance of payments (Chapter 38)
6. Balance of payments
7. Foreign exchange rates
8. Implications of foreign exchange rates and economic policies
9. Mock AP Macroeconomics Exam