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AP® Macroeconomics Self-Paced

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?

Course Learning 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.

Unit 1: Basic Economic Concepts (Topics 1-3)

Topic 1: Introduction to AP Macroeconomics

  • Understand the rules and policies of the course, and expectations of you
  • 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.

Topic 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.

Topic 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.

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

Topic 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.

Topic 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.

Topic 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.

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

Topic 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.

Topic 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.

Topic 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.

Unit 4: Financial Sector (Topics 10-12)

Topic 10: Finance, 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 issued 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 creates and expands the money supply.
  • Calculate (using data and balance sheets as appropriate) the effects of changes in the banking system.

Topic 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.

Topic 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 the money market.
  • Explain (using graphs as appropriate) the determinants 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.

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

Topic 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.

Topic 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.

Topic 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.

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

Topic 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.

Topic 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 the 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.

Unit 7: Exam Preparation (Topics 18-20)

Topic 18: Practice AP Exam

  • Identify any gaps in knowledge that need to be reviewed before the AP Exam.
  • Gain familiarity with the types of questions that will appear on the AP Exam.
  • Function within the time constraints imposed by the AP Exam.

Topic 19: Practice AP Exam Analysis

  • Identify any gaps in knowledge that need to be reviewed before the AP Exam.
  • Gain familiarity with the types of questions that will appear on the AP Exam.
  • Function within the time constraints imposed by the AP Exam.

Topic 20: Reflections and Final Thoughts

  • Complete the course exit surveys, assessing the nature and difficulty of the course.
  • Review the expectations of the AP Macroeconomics and assess your preparation for the exam.