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AP® Economics

Syllabus

Course Essential Questions:

  • How do economists measure the health of a national economy?
  • How do markets allocate goods and services in a world of scarcity?
  • How do economists demonstrate economic situations and actions through graphical representations?
  • How is an economy affected by economic (fiscal and monetary) policy?
  • How does marginal analysis help to explain human behavior?
  • How do how do profit-seeking firms make production decision in the face of cost and market competition pressures?
  • Why do markets sometimes fail to produce socially optimal outcomes, and what are some solutions to these problems?

Objectives:

  • Define and interpret economic principles and models.
  • Explain given economic outcomes.
  • Determine outcomes of specific economic situations.
  • Model economic situations using graphs or visual representations.

Macro/Micro Unit 1: Basic Economic Concepts (Weeks 1-3)

Week 1: Introduction to AP Economics

  • Understand the rules and policies of the course, and expectations of you as a contributing member of our learning community.
  • Begin to build community by sharing important information with your teacher and classmates.
  • Develop your skills for navigating the course environment and using the various course tools.
  • Understand that individuals and societies are forced to make choices because most resources are scarce.
  • Define scarcity and economic resources.

Week 2: Modeling Opportunity, Costs, Specialization, and Trade

  • Define the PPC and related terms.
  • Explain how the PPC illustrates opportunity costs, tradeoffs, inefficiency, efficiency, and economic growth or contraction under various conditions.
  • Calculate opportunity cost.
  • Define absolute and comparative advantage.
  • Determine absolute and comparative advantage.
  • Explain how specialization according to comparative advantage with appropriate terms of trade can lead to gains from trade.
  • Calculate mutually beneficial terms of trade.

Week 3: The Foundational Model - Supply and Demand

  • Define the law of demand and the law of supply.
  • Explain the relationship between the price of a good or service and the quantity demanded (supplied).
  • Explain the determinants of demand and the determinants of supply.
  • Define market equilibrium.
  • Define a surplus and shortage.
  • Explain how prices adjust to restore equilibrium in markets that are experiencing imbalances.
  • Calculate the surplus or shortage in the market experiencing imbalance.
  • Explain how changes in demand and supply affect equilibrium price and quantity.

Macro Unit 2: Economic Indicators and the Business Cycle (Weeks 4-6)

Week 4: Economic Indicators – GDP

  • Define how GDP is measured and its components.
  • Calculate nominal GDP.
  • Define the limitations of GDP.
  • Define nominal GDP and real GDP.
  • Calculate real GDP and the GDP deflator.
  • Define turning points and phases of the business cycle.
  • Explain turning points and phases of the business cycle.

Week 5: Economic Indicators – Unemployment

  • Define the labor force, the unemployment rate, and the labor force participation rate.
  • Explain how changes in employment and the labor market affect the unemployment rate and the labor force participation rate.
  • Calculate the unemployment rate and the labor force participation rate.
  • Define the limitations of the unemployment rate.
  • Define the types of unemployment and the natural rate of unemployment.
  • Explain changes in the types of unemployment.

Week 6: Economic Indicators – Inflation

  • Define the consumer price index (CPI), inflation, deflation, disinflation, the inflation rate, and real variables.
  • Explain how price indices can be used to calculate the inflation rate and to compare nominal variables over time periods.
  • Calculate the CPI, the inflation rate, and changes in real variables.
  • Define the shortcomings of the CPI as a true measure of inflation.
  • Explain the costs that unexpected inflation (deflation) imposed on individuals and the economy.

Macro Unit 3: National Income and Price Determination (Weeks 7-9)

Week 7: Income, Expenditure, and Aggregate Demand

  • Define (using graphs as appropriate) the aggregate demand (AD) curve.
  • Explain (using graphs as appropriate) the slope of the AD curve and its determinants.
  • Define the expenditure multiplier, the tax multiplier, the marginal propensity to consume and save.
  • Explain how changes in spending and taxes lead to changes in real GDP.
  • Calculate how changes in spending and taxes lead to changes in real GDP.

Week 8: Short-Run and Long-Run Aggregate Supply

  • Define (using graphs as appropriate) the short-run aggregate (SRAS) curve.
  • Explain (using graphs as appropriate) the slope of the SRAS curve and its determinants.
  • Explain (using graphs as appropriate) how movement along the SRAS curve implies a relationship between the price level (and inflation) and unemployment.
  • Define (using graphs as appropriate) the short-run and the long run.
  • Define (using graphs as appropriate) the long-run aggregate supply (LRAS) curve.
  • Explain (using graphs as appropriate) the short-run and long-run equilibrium price level and output level.
  • Explain (using graphs as appropriate) the response of output, employment, and the price level to an aggregate demand or aggregate supply shock in the short-run.
  • Explain (using graphs as appropriate) the response of output, employment, and the price level to an aggregate demand or aggregate supply shock in the long-run.

Week 9: Fiscal Policy – Closing Gaps Through Economic Policy

  • Define fiscal policy and related terms.
  • Explain (using graphs as appropriate) the short-run effects of a fiscal policy action.
  • Calculate the short-run effects of a fiscal policy action.
  • Define why there are lags to discretionary fiscal policy.
  • Define automatic stabilizers.
  • Explain how automatic stabilizers moderate business cycles.

Macro Unit 4: Financial Sector (Weeks 10-12)

Week 10: Money and Money Creation

  • Define the principal attributes--liquidity, rate of return, and risk--associated with various classes of financial assets, including money.
  • Explain the relationship between the price of previously issues bonds and interest rates.
  • Define & calculate the nominal and real interest rate.
  • Explain the relationship between changes in nominal interest rates, expected inflation, and real interest rates.
  • Define money and its functions.
  • Calculate (using data as appropriate) measures of money.
  • Define key terms related to the banking system and the expansion of the money supply.
  • Explain how the banking system crates and expands the money supply.
  • Calculate (using data and balance sheets as appropriate) the effects of changes in the banking system.

Week 11: Central Banking, The Federal Reserve, and Monetary Policy

  • Define monetary policy and related terms.
  • Explain (using graphs as appropriate) the short run effects of a monetary policy action.
  • Calculate (using data and balance sheets as appropriate) the effects of a monetary policy action.
  • Define why there are lags to monetary policy.

Week 12: The Money Market and Economic Policy

  • Define (using graphs as appropriate) the money market, money demand, and money supply.
  • Explain (using graphs as appropriate) the relationship between the nominal interest rate and the quantity of money demanded (supplied).
  • Define (using graphs as appropriate) equilibrium in the money market.
  • Explain (using graphs as appropriate) how nominal interest rates adjust to restore equilibrium in money market.
  • Explain (using graphs as appropriate) the determinant of demand and supply in the money market.
  • Explain (using graphs as appropriate) how changes in demand and supply in the money market affect the equilibrium interest rate.

Macro Unit 5: Long-Run Consequences of Stabilization Policies (13-15)

Week 13: Deficits and the Public Debt

  • Define (using graphs as appropriate) the loanable funds market, demand for loanable funds, supply of loanable funds, and equilibrium in the loanable funds market.
  • Explain (using graphs as appropriate) the relationship between the real interest rate and the quantity of loanable funds demanded (supplied).
  • Define national savings in both a closed and an open economy.
  • Explain (using graphs as appropriate) how real interest rates adjust to restore equilibrium in the loanable funds market.
  • Explain (using graphs as appropriate) the determinants of demand and supply in the loanable funds market.
  • Explain (using graphs as appropriate) how changes in demand and supply in the loanable funds market affect the equilibrium real interest rate and equilibrium quantity of loanable funds.
  • Define the government budget surplus (deficit) and national debt.
  • Explain the issues involved with the burden of the national debt.
  • Define crowding out.
  • Explain (using graphs as appropriate) how fiscal policy may cause crowding out.

Week 14: Inflation and Unemployment Tradeoffs

  • Explain (using graphs as appropriate) the effects of combined fiscal and monetary policy actions.
  • Define (using graphs as appropriate) the short-run Phillips curve.
  • Explain (using graphs as appropriate) short-run and long-run equilibrium in the Phillips curve model.
  • Explain (using graphs as appropriate) the response of unemployment and inflation in the short-run and the long-run.
  • Explain (using graphs as appropriate) how inflation is a monetary phenomenon.
  • Define the quantity theory of money.
  • Calculate the money supply, velocity, the price level, and real output using the quantity theory of money.

Week 15: Economic Growth

  • Define measures and determinants of economic growth.
  • Explain (using graphs and data as appropriate) the determinants of economic growth.
  • Calculate (using graphs and data as appropriate) per capita GDP and economic growth.
  • Explain (using graphs as appropriate) how the PPC is related to the long-run aggregate supply (LRAS) curve.
  • Explain (using graphs as appropriate) public policies aimed at influencing long-run economic growth.
  • Define supply-side fiscal policies.

Macro Unit 6: Open Economy - International Trade and Finance (Weeks 16-17)

Week 16: Balance of Payments and International Capital Flows

  • Define the current account (CA), the capital and financial account (CFA) and the balance of payments (BOP).
  • Explain how changes in the components of the CA and CFA affect the country’s BOP.
  • Calculate the CA, the CFA, and the BOP.
  • Explain (using graphs as appropriate) how differences in real interest rates across countries affect financial capital flows, foreign exchange markets, and loanable funds markets.

Week 17: Foreign Exchange Markets

  • Define the exchange rate, currency appreciation, and currency depreciation.
  • Explain how currencies are valued relative to one another.
  • Calculate the value of one currency relative to another.
  • Define the foreign exchange market, demand for currency, and supply of currency.
  • Explain (using graphs as appropriate) the relationship between the exchange rate and the quantity of currency demanded (supplied).
  • Define (using graphs as appropriate) the equilibrium exchange rate.
  • Explain (using graphs as appropriate) how exchange rates adjust to restore equilibrium in the foreign exchange market.
  • Explain (using graphs as appropriate) the determinants of currency demand and supply.
  • Explain (using graphs as appropriate) how changes in demand and supply in th foreign exchange market affect the equilibrium exchange rate.
  • Explain (using graphs as appropriate) how changes in the value of a currency can lead to changes in a country’s net exports and aggregate demand.

Micro Unit 2: Supply and Demand (Weeks 18-21)

Week 18: Macro Practice Exam; International Trade and Public Policy

  • Define tariffs and quotas.
  • Explain (using graphs as appropriate) how markets are affected by public policy related to international trade.
  • Calculate (using data from a graph or table as appropriate) changes in market outcomes resulting from public policy related to international trade.

Week 19: Macro Practice Exam Reflection; Elasticity

  • Complete reflective activity to analyze performance on practice AP Macro Exam.
  • Define measures of elasticity.
  • Explain (using graphs as appropriate) measures of elasticity and the impact of a given price change on total revenue and total expenditure.
  • Calculate (using graphs as appropriate) measures of elasticity.

Week 20: Total Welfare & Tax Incidence

  • Define (using graphs as appropriate) market equilibrium, consumer surplus, and producer surplus.
  • Explain (using graphs as appropriate) how equilibrium price, quantity, consumer surplus, and producer surplus for a good or service are determined.
  • Calculate (using data from a graph or table as appropriate) areas of consumer surplus and producer behaviors that influence incentives and therefore affect outcomes.
  • Calculate (using data from a graph or table where appropriate) changes in market outcomes resulting from government policies.

Week 21: Consumer Choice Theory

  • Define the key assumptions of consumer choice theory.
  • Explain (using a table or graph as appropriate) how a rational consumer’s decision making involves the use of marginal benefits and marginal costs.
  • Calculate (using a table or a graph when appropriate) how a rational consumer’s decision making involves the use of marginal benefits and marginal costs.
  • Define marginal analysis and related terms.
  • Explain a decision using marginal analysis (using a table or graph when appropriate).

Micro Unit 3: Production, Cost, and the Perfect Competition Model (Weeks 22-24)

Week 22: Profit & Profit Maximization

  • Define the different types of profit.
  • Explain how firms respond to profit opportunities.
  • Calculate a firm’s profit or loss.
  • Define (using graphs or data as appropriate) the profit-maximizing rule.
  • Explain (using graphs or data as appropriate) the profit-maximizing level of production.

Week 23: The Production Function and Firm Costs

  • Define (using graphs as appropriate) key terms and concepts relating to production and cost.
  • Explain (using graphs as appropriate) how production and cost are related in the short run and long run.
  • Calculate (using data from a graph or table as appropriate) the various measures of productivity and short-run and long-run costs.

Week 24: The Perfectly Competitive Market and Firm

  • Explain (using graphs or data where appropriate) firms’ short-run decisions to produce positive output levels, or long-run decisions to enter or exit a market in response to profit-making opportunities.
  • Define (using graphs as appropriate) the characteristics of perfectly competitive markets and efficiency.
  • Explain (using graphs as appropriate) equilibrium and firm decision making in perfectly competitive markets and how prices in perfectly competitive markets lead to efficient outcomes.
  • Calculate (using data from a graph or table as appropriate) economic profit (loss) in perfectly competitive markets.
  • Define social efficiency.
  • Explain (using graphs where appropriate) why resource allocation in perfectly competitive markets is socially efficient.

Micro Unit 4: Imperfect Competition (Weeks 25-27)

Week 25: Monopoly

  • Define (using graphs as appropriate) the characteristics of imperfectly competitive markets and inefficiency.
  • Explain (using graphs as appropriate) equilibrium, firm decision making, consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets and why prices in imperfectly competitive markets cannot be relied on to coordinate the actions of all possible market participants and can lead to inefficient outcomes.
  • Calculate (using data from a graph or table as appropriate) areas of consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets.
  • Explain equilibrium allocations in imperfect markets relative to efficient allocations (using graphs where appropriate) and why these markets are inefficient.
  • Calculate (using graphs where appropriate) the deadweight loss resulting from the production of a non-efficient quantity.

Week 26: Monopolistic Competition

  • Explain (using graphs as appropriate) equilibrium, firm decision making, consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets and why prices in imperfectly competitive markets cannot be relied on to coordinate the actions of all possible market participants and can lead to inefficient outcomes.
  • Calculate (using data from a graph or table as appropriate) areas of consumer surplus, producer surplus, profit (loss), and deadweight loss in imperfectly competitive markets.
  • Explain equilibrium allocations in imperfect markets relative to efficient allocations (using graphs where appropriate) and why these markets are inefficient.
  • Calculate (using graphs where appropriate) the deadweight loss resulting from the production of a non-efficient quantity.

Week 27: Oligopoly

  • Define (using tables as appropriate) key terms, strategies, and concepts relating to oligopolies and simple games.
  • Explain (using tables as appropriate) strategies and equilibria in simple games and the connections to theoretical behaviors in various oligopoly market and non-market settings.
  • Calculate (using tables as appropriate) the incentive sufficient to alter a player’s dominant strategy).

Micro Unit 5: Factor Markets (Weeks 28-29)

Week 28: Competitive Labor Markets & Monopsony

  • Define (using graphs as appropriate) key terms and concepts relating to factor markets.
  • Explain (using graphs as appropriate) the relationship between factors of production, firms, and factor prices.
  • Calculate (using data from a graph or table where appropriate) the marginal revenue product and marginal resource cost.
  • Explain (using graphs where appropriate) firms’ and factors’ responses to changes in incentives and constraints.
  • Define (using graphs as appropriate) the characteristics of perfectly competitive and monopsonistic factor markets.
  • Explain (using graphs where appropriate) the profit-maximizing behavior of firms buying labor (with other inputs fixed) in perfectly competitive and monopsonistic markets.
  • Calculate (using data from a graph or table where appropriate) measures representing the profit-maximizing behavior of firms buying labor (with other inputs fixed) in perfectly competitive and monopsonistic markets.

Week 29: Other Factor Markets & Input Combos

  • Define (using graphs as appropriate) key terms and concepts relating to factor markets.
  • Explain (using graphs as appropriate) the relationship between factors of production, firms, and factor prices.
  • Define the cost-minimizing rule for hiring inputs.
  • Calculate the optimal input (profit-maximizing) input mix.

Micro Unit 6: Market Failure and the Role of Government (Weeks 30-33)

Week 30: Externalities and Socially Optimal Outcomes

  • Explain (using graphs where appropriate) how private incentives can lead to actions by rational agents that are socially undesirable (inefficient) market outcomes.
  • Define externalities.
  • Explain (using graphs where appropriate) how in the presence of externalities, private markets do not take into consideration social costs or social benefits.
  • Explain (using graphs where appropriate) how public policies address positive or negative externalities.

Week 31: Public Goods and Income Distribution; Micro Practice Exam

  • Define whether goods are rival and/or excludable.
  • Explain how the nature of rival and/or excludable goods influences the behavior of individuals and groups.
  • Define measures of economic inequality in income and wealth.
  • Explain sources of income and wealth inequality.

Week 32: Micro Practice Exam Reflection

  • Complete reflective activity to analyze performance on practice AP Micro Exam.
  • Review Macro topics to prepare for the exam.

Week 33: Reflections and Final Thoughts

  • Complete end of course activities.