Maher: 2015-16
John Champe High School
Advanced Placement Economics 2015- 2016
Mr. Maher: wmaher@lcps.org
Resources
Textbook: McConnell, C. and Brue, S. (2009). Economics, 18th Edition, New York: McGraw-Hill.
Textbook supplement: Ellison, L. (2009). AP Achiever: Advanced Placement exam prep guide for
microeconomics and macroeconomic. New York: McGraw-Hill.
Outside reading #1: Hazlitt, Henry (1988 reprint). Economics in One Lesson.
Outside reading #2: Wheelan, Charles (2002). Naked economics. New York: Norton.
Course Overview and Objectives:
Economics is about how we, as a society, allocate scarce resources. Who gets what? How
much? When? What price? Who makes it? These are all questions that economists answer. In
this class, you will be taking TWO college courses and preparing for TWO AP exams. Our first
goals are to become economically literate, and to learn how to improve decision making
through economic thinking. By working to meet those goals, you will be well prepared for both
exams.
Advanced Placement Economics is a two semester course. (Syllabus: Micro and Macro)
First Semester: The focus of study during the first semester is Microeconomics. The central
goal in this course is to help students gain an understanding of and appreciation for the
principles of economics that affect how individuals, households and businesses make economic
decisions. Students will learn how to generate charts and graphs to describe economic concepts.
Second Semester: The focus of study during the second semester is Macroeconomics. The
central goal in this course is to help students gain an understanding of and appreciation for the
principles of economics that apply to the American economic system as a whole. Students will
study the nature and functions of product markets and particular emphasis will be placed on
national income, fiscal and monetary policy, economic performance measures, economic
growth and open economies.
Maher: 2015-16
Microeconomic Outline (1st Semester)
(THIS OUTLINE IS SUBJECT TO CHANGE. FOR A DETAILED AGENDA AND
OUTLINE PLEASE CHECK THE CLASS CMS WEB PAGE !)
1st Quarter
Unit 1: Basic Economic Concepts
(Chapters 1, 2, 4 & 5, McConnell & Brue)
A. Founding Principles
 Scarcity, the economizing problem
 Tradeoffs and Opportunity Cost
 Free-market system (Adam Smith’s invisible hand)
B. Types of Economics
 Microeconomics vs. macroeconomics
 Positive economics vs. normative economics
C. Production Possibilities Graph
 Straight vs. bowed PPF
 Underutilization, full employment, and unattainable
 Law of increasing opportunity cost
 3 shifters of the PPF
 Consumer goods vs. capital goods
D. Circular Flow Model
 Product market, Factor market, and Public/Private sector
E. Specialization and Trade
 Absolute advantage
 Comparative advantage
Unit 2: Supply, Demand, And Consumer Choice
(Chapters 3, 6, & 7. McConnell & Brue)
A. Demand (graph)
 Law of demand
 Market demand curve
 Determinants of demand
 Normal vs. inferior goods
 Substitutes and complements
B. Supply (graph)
 Law of supply
 Market supply curve
 Determinants of supply
C. Equilibrium and Efficiency (graph)
 Equilibrium price and quantity
 Disequilibrium: surplus and shortages (graphing)
D. Government Policies (graphs)
 Price floors and Price ceilings
 Excise taxes, Subsidies, Tariffs, Quotas
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E. Elasticity
 Price, Income, and Cross Price elasticity of demand
 The total revenue test (graph)
F. Consumer Choice
 Law of diminishing marginal utility, Substitution effect, Income effect
 Marginal benefit/cost
 Utility maximizing rule
Unit 3 Costs of Production and Perfect Competition
(Chapters 8 & 9. McConnell & Brue.)
A. Economists vs. Accountants
 Total revenue
 Explicit and Implicit costs
 Economic costs and profits
B. Costs of Production (graph)
 Fixed Costs, Variable costs, and Total costs
 Per-unit costs (AVC, AFC, ATC)
 Shifts in MC, ATC. AVC, and AFC
 Marginal costs and Marginal revenue
 Sunk costs
C. Law of Diminishing Marginal Returns (graph)
 Stage I: increasing returns
 Stage II: decreasing returns
 Stage III: negative returns
D. Long-run Production Costs (graph)
 Economies of scale, Constant Returns to scale, Diseconomies of scale
E. Characteristics of Perfect Competition
 Price takers
 Demand = MR= Price
 Graph: Firm vs. industry (market)
 Short-run (profit or loss)
 Long-run equilibrium (New firm enter and exit)
 Normal profit
 Shutdown decision (P< AVC)
 Productive efficiency (P = Min ATC)
 Allocative efficiency (P = MC)
2nd Quarter
Unit 4 Imperfect Competition
(Chapters 10 & 11. McConnell & Brue)
A. Characteristics of Monopolies
 Barriers to entry
 MR below demand (graphs)
 Profit-maximizing price and quantity
 Natural monopoly
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B. Effects on overall economy
 Compared to competitive industry
 Dead-weight loss
 X-efficiency
C. Price discrimination (graph)
 Purpose and results
 Graph (MR=D)
D. Regulation
 Unregulated price, Fair return price, and Socially optimal price
 Taxes and subsidies
E. Characteristics of Monopolistic Competition
 Long-run equilibrium (graph)
 Excess capacity
 Non-price competition
 Product differentiation
F. Characteristics of Oligopolies
 Kinked demand curve-competitive pricing
 Game theory (chart) price leadership
 Collusion and cartels
Unit 5 Resource Market
(Chapters 12, 13 & 14. McConnell & Brue)
A. Demand for labor
 Derived demand
 Marginal revenue product
 Marginal resource cost
B. Perfectly competitive labor market (graph)
 Wage makers
 Perfectly elastic supply of labor
C. Monopsony (graph)
 Wages and quantity compared to perfectly competitive labor market
D. Labor Unions
 Goals and methods
E. Effects of Minimum Wage
F. Wage differentials
 Investment in human capital vs. physical capital
G Rent, Interest and Profit
 Distribution of Income
 Capital and Interest
 Loanable Funds market
Unit 6 Market Failures and Government Involvement
(Chapters 16, 17 & 20. McConnell & Brue)
A. Public goods
 Demand for public goods
 Supply of public goods
 Free-rider problem
 Non-excludability and Non-rivalry
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B. Positive externalities/spillover benefits (graph)
 Marginal social benefits vs. private benefits
 Underallocation
 Government remedy
C. Negative externalities/spillover costs (graph)
 Marginal social cost vs. private cost
 Overallocation
 Government remedy
D. Economics of Taxation (Tax Burden)
Progressive
Regressive
Proportional
E. Income distribution
 Lorenz curve (graph)
 Tax incidences
Macroeconomic Outline (2nd Semester)
Third Quarter
Unit 7: Macroeconomic Data and Measurement
(Chapters 23 & 24 McConnell & Brue)
A. Introduction to Macro
 Basic Concepts
 Long Run vs. Short Run
 Demand Shock vs. Supply Shock (Sticky Prices)
B. GDP (Nominal and Real values)
 Expenditure approach
 Income Approach
Unit 8: Inflation and Unemployment
(Chapters 25 & 26 )
A. Economic Growth
 Rate of Economic Growth
 Real GDP
 Economic Growth and PPC
 Labor Productivity
B. Business Cycle
C. Inflation
 CPI
 Demand- Pull and Cost Push
D. Unemployment
 Types of unemployment
 GDP Gap and Okun’s Law
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Unit 9: Consumptions vs. Savings
(Chapters 27 & 28)
A. Average and marginal Propensities to Consume and Save
 MPC and MPS as Slopes
B. Interest Rates
 Expected Rate of Return
 Real Interest Rates
C. Multiplier Effect
 Changes in Spending and changes in Real GDP
D. International Trade and the Public Sector
 Recessionary Gap vs. Inflationary Gap
Fourth Quarter
Unit 10: Aggregate Demand and Aggregate Supply
(Chapters 29 & 35)
A. Aggregate Demand
 Changes in Aggregate Demand
 Aggregate Demand Curve
 Determinants of AD
B. Aggregate Supply
 Output in Immediate Short Run, Short Run and Long Run
 Aggregate Supply Curve
 Determinants of AS
C. Fiscal Policy
 Expansionary vs. Contractionary Fiscal Policy
 Built in Stabilizers
 Crowding Out effect
Unit 11: Money and Banking & Long Run AS
(Chapter 30, 31, 32, 33 & 35)
A. Money
 M1
 M2
B. Banking\
 Federal Reserve System
 Globalization of Financial markets
C. Money Creation and Monetary Policy
 Reserve Requirement and Discount Rate
 Reserve Ratio
 Monetary Multiplier
 Interest Rates
 Taylor Rule (Federal Funds Rate)
D. Long Run Aggregate Supply
 Short Run AS vs. Long Run AS
 Long Run Equilibrium
 Demand –Pull Inflation
 Phillips Curve and Stagflation
E. Supply Side Theory
 Laffer Curve
 Application of Supply Side Theory
Maher: 2015-16
Unit 12: Exchange Rates/ Trade Deficit
(Chapter 37 & 38)
A. International Trade
 Key facts and Basis for Trade
 PPC
 Gains from Trade
 Free Trade vs. Protectionist Theory (WTO)
B. Balance of Payments
C. Flexible Exchange Rates
D. Fixed Exchange Rates
Macroeconomics Final Exam (LCPS Senior Exemption Policy will Be Followed)
Course Requirements and Resources:
Notebook organization:
You will need a three-ring binder for this class. The front page will be the table of contents. Mr. Maher will
provide the table of contents sheet. All work will be logged on this in the order that it is given, and points
possible and points earned should be added as well. The actual assignments will placed into the notebook and
will be divided into 5 separate sections. The sections will be:
1. Warm Ups
2. Class Notes
3. Handouts
4. Grade Assignments
5. Tests and Quizzes
The notebook will be collected and reviewed for a grade of 25 points near the end of the quarter, but the main
purpose of the assignment is to enhance your organization and aid your success in this course.
Problem Sets:
These will be handed out for each unit, and will be due two blocks before the unit test. They will include
multiple choice, short answer, and free response questions, and will double as a test review.
Reading Quizzes:
There will be one reading quiz for almost every chapter, although in rare instances there will be two or none.
These will consist primarily of multiple-choice questions covering both vocabulary and content.
Unit Tests:
These will consist of 50 multiple choice questions which will account for 100 points and two free-response
questions that will count for 50 points, although they will not always be 25 points each
Classroom Activities:
These are typically practice problems, graphing activities, or short answer questions designed to reinforce the
content covered that day. They will be done in an individual/pair format.
Grades
AP Economics is primarily a reading, lecture, discussion and theory course. All major tests will be announced
well in advance and will be multiple-choice questions and free response questions. Frequent reading/vocabulary quizzes
will be given to assess students’ understanding of their reading. All grades will be on a point system for each quarter. All
though there will be exceptions, each assignment generally will be worth the following number of points:
Maher: 2015-16
Grades:
Assignment
Points
Assignment
Test
150
Notebook
Problems Sets
50-75
Class Activities
Reading/Vocabulary Quiz
10-25
Projects
**Each student is expected to monitor his or her own progress via Phoenix**
Points
25
5-20
100
1. All tests, quizzes, projects and homework will be assigned a point value. Your quarter grade will be
determined by the total number of points earned, versus the total number of points assigned.
2. There will be a major project worth 75 to 100 points assigned each quarter.
1st Quarter: Economics Today Project
2nd Quarter: Book Report (Economics in One Lesson)
3rd Quarter: Book Report (Naked Economics)
4th Quarter: AP Exam Review Project
3. Students will have frequent reading/vocabulary quizzes. (10-25 points each)
4. Late work policy:
For tests/quizzes missed for absences/tardiness, the student is responsible for scheduling a make-up time
to be completed within one week of their return to class. Failure to do so will result in a grade of 50%
being assigned. Missed test or quizzes for unexcused absences or tardiness will result in a grade of 50%
being assigned.
5. The class notebooks will be checked once a quarter and will be worth a grade of 25 points.
Grading:
1st quarter 2nd quarter 3rd quarter 4th quarter Final Course Grade
25%
25%
25%
25%
100%
Frequently Asked Questions:
When are the AP Economics Exams? Macro exam is Wednesday, May 11, 2016 and Micro exam is Friday,
May 13, 2016 (Macro is in the afternoon, Micro in the morning).
What is the structure of the AP exams? The exam is the same format for micro and macro: 60 multiple
choice questions in 70 minutes, and 3 free response (1 long and 2 short) in 50 minutes (the long question is
worth 50% of the free response score). The multiple choice section is worth 2/3 of the total score. Typically,
getting 60% of the multiple choice correct is enough to pass the exam (assuming the free responses are similarly
competent).
What schools offer credit for these exams? Check with your schools directly. College-Board also has a good
way to do it on-line at http://www.collegeboard.com/ap/creditpolicy. Some schools offer credit for threes,
many for fours, and at some, credit is only offered for fives. A very few do not offer credit.
Guidelines for Success:
1.
Read and outline chapters, complete the multiple choice sections for each chapter.
2.
Correct mistakes on your assignments. Fix the errors that exist in your mind before moving on!
3.
Learn and love the graphs used in Economics, and maintain a graph section in your notebook.
4.
Create study groups and work together, but find students with work ethics similar to your own.
5.
Review, review and review some more. The more you review information, the more you will
remember.
Maher: 2015-16
Due by Monday or Tuesday, Sept. 21st or 22nd
(Will depend on A or B block)
I have read and understand all parts of the AP Economics syllabus.
___________________________
Student name (print)
______________________________
Student Signature
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Parent Signature
Mr. Maher
AP Economics
Room 2205
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Date