AP Macroeconomics
Course
The course in AP Macroeconomics is designed to be a one semester, college-level course.
This class is taken as Part II of a combined full year AP Micro and Macro program. As a
goal, this course is designed to prepare students for success on the AP Macroeconomics
exam that is taken in May.
AP Macroeconomics emphasizes economic principles as applied to the economy
as a whole. Topics covered in the course are aligned with the AP Macroeconomic Course
Description outlined by the College Board. The course will provide instruction in each of
the following seven topics
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Basic economic concepts
Measurement of economic performance
National income and price determination
Financial sector
Inflation, unemployment, and stabilization policies
Economic growth and productivity
Open economy: international trade and finance
Text Used
Bade, and Michael Parkin. Foundations of Econmics (AP Edition), Pearson/Addison
Wesley, 2007.
Supplemental Text
Morton, John. Advanced Placement Economics Macroeconomics Student Activities, 3rd
ed. New York: National Council on Economic Education, 2003
Additional Readings
Wheelan, Charles. Naked Economics, Undressing the Dismal Science. Norton Press 2002
Wall Street Journal
The Economist
Web Resources
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http://www.reffonomics.com
http://www.ncee.net
Teacher web page
Assessments
Section Quizzes
Unit Test
Homework (Problem sets, readings, worksheets)
Project
Participation
30%
30%
20%
10%
10%
Unit One: Basic Economic Concepts (3 weeks)
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Scarcity, choice, and opportunity cost
Production possibilities curve
Comparative advantage, absolute advantage, specialization and exchange
Demand, supply, and market equilibrium
Macroeconomic topics: Circular Flow, business cycles, unemployment
inflation.
Unit One Key Concepts and Graphs
Concepts: The economic way of thinking, micro vs. macro, positive vs. normative
economics, choice and economic decision making, scarcity, opportunity cost, production
possibilities, absolute and comparative advantage, division and specialization of labor,
demand schedule, the determinants of demand, firm and market demand curves, supply
schedule, determinants of supply, market equilibrium, shifts in demand and supply,
determining price and quantity, macroeconomic issues.
Graphs
• Production possibilities frontier
• Demand and Supply
• Demand and Supply shift models
Text Chapters: 1,3,4,20,21,22
Activities
Morton. AP Economics, Activities 1-8.
Mankiw’s Ten Principles of Economics
Unit Two: Measurement of Economic Performance (2 weeks)
National income accounts
• Circular flow
• Gross domestic product
• Components of gross domestic product
• Real versus nominal gross domestic product
Inflation
• Price indices
• Nominal and real values
• Cost of inflation
Unemployment
• Definition and measurement
• Types of unemployment
• Natural rate of unemployment
Text Chapter: 20
Activities
Morton. AP Economics, Activities 12-17
Unit Two Key Concepts and Graphs:
Concepts: Circular flow of economic activity, inclusions and exclusions of GDP,
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.
Graphs:
• Circular Flow Diagram
• Phases of the business cycle
Unit Three: National Income and Price Determination: (2 weeks)
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 vs. full employment output
• Economic fluctuations
Text Chapter: 29
Activities
Morton. AP Economics, Activities 20-29
Unit Three: Key Concepts and Graphs
Concepts: marginal propensity to consume, the multiplier effect, reasons for a downward
sloping aggregate demand curve, determinants of aggregate demand, determinants of
aggregate demand, aggregate supply in the short and long run, sticky versus flexible price
and wages, determination of equilibrium output and price level, actual versus full
employment, utilization of resources
Graphs:
Investment demand curve
Aggregate demand and short run aggregate supply curve
Aggregate demand and long run aggregate supply curve
Unit Four: Financial Sector: (3 weeks)
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
Text Chapters: 24,26,27,28
Activities
Morton. AP Economics, Activities 34-39
Unit Four Key Concepts and Graphs:
Concept: Functions of money, characteristics of money, measures of money, demand of
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
Unit Five: Inflation, Unemployment, and Stabilization Policies.
(2 weeks)
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
Text Chapters: 31,32
Activities
Morton. AP Economics, Activities 43-46
Unit Five Key Concepts and Graphs:
Concepts: fiscal policy and the aggregate demand/aggregate supply model, monetary
policy and the aggregate demand/aggregate supply model, combinations of the 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
Graphs:
• Aggregate demand/aggregate supply model
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Phillips curve
Unit Six: Growth and Productivity (2 weeks)
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Growth and Productivity
Investment in human capital
Investment in physical capital
Research and development, and technological development
Growth policy
Productivity
Text Chapters: 24,25
Activities
Morton. AP Economics, Activity 47
Unit Six Key Concepts and Graphs:
Concepts: ingredients of economic growth, production possibilities analysis, growth in
the AD/AS model, long-and short-run analysis, labor and productivity, technological
advance
Graphs
• Production possibilities curve
• Aggregate demand/aggregate supply model
Unit Seven: International Trade and Finance (2 weeks)
International Trade and Finance
A. Balance of payments accounts
• Balance of trade
• Current account
• Capital account
B. Foreign exchange market
• Demand for supply of foreign exchange
• Exchange rate determination
• Currency appreciation and depreciation
C. Net exports and capital flows
D. Links to financial and goods markets
Text Chapters: 34,35
Activities
Morton. AP Economics, Activities 49-55
Unit Seven Key Concepts and Graphs
Concepts: the 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