Mrs. K.L. Gustafson
Social Studies Department
ADVANCED PLACEMENT
MACROECONOMICS
The purpose of an AP course in macroeconomics is to give students a thorough understanding of the principles of economics that apply to an economic system as a whole. This course places particular emphasis on the study of national income and price-level determination, and also develops the student’s familiarity with economic performance measures, the financial sector, stabilization policies, economic growth, and international economics. Students are not required although highly encouraged to take the Advanced Placement Macroeconomics exam in May to earn college credit.
The AP Test
Each exam (macro and micro) is approximately two hours long and includes two distinct parts: a 70 minute multiple choice section, which accounts for two-thirds of the student’s examination grade, and a 50 minute free-response section, which accounts for one-third of the student’s examination grade. Candidates will be given a 10 minute reading period immediately preceding the time allowed for answering the free-response questions. The free-response portion consists of one long and two short essays that require the student to interrelate different content areas, set forth and evaluate general macroeconomic principles, and demonstrate organization and analytical skills. Students should be able to clarify their written analyses by incorporating economic models. Most students who do well on the free response questions include graphical analyses in their answers. The long essay accounts for one-half of the student’s free response score. Each of the two short essays accounts for one-quarter of the student’s total free-response score.
Classroom Atmosphere
It is of utmost importance that this class is one that is fun and challenging. This class requires your participation as its main driving force. It will require you to participate as a creative and critical thinker as well as a collaborative team member. In order for the class to be productive and sustain a learning environment for everyone to excel, utmost respect and courtesy must be exercised at all times.
GRADES –All classroom assignments, quizzes, tests, etc. are graded on a point basis and weighted for the trimester. Grades will be posted regularly on Skyward and you may request an informal progress report at any time.
Home/Classwork 30%
Projects 20%
Unit Tests/Quizzes 30%
AP Final Exam 20%
100 A+ 89-87 B+ 79-77 C+ 69-67 D+
99-93 A 86-84 B 76-74 C 66-64 D
92-90 A- 83-80 B- 73-70 C- 63-60 D-
59.9 or below F
Assignments
Students are responsible to complete daily classwork or homework for teacher evaluation. Home and classwork are an opportunity for students to practice and apply what they have learned, realize concepts that they may need more guidance on, and push themselves to gain further insight and depth into the economic subject material. I highly recommend using the FHS Agenda Planners to keep track of these assignments. Journals, group and individual projects and simulations will be a part of each unit as well as to diversify lessons and offer opportunities for alternative assessment.
Latework
Home and classwork should be handed in on the assigned due date for students to have the opportunity to receive full credit. A student may turn in an assignment after the deadline- up until the next class period – to receive credit with points taken off for being late. In extenuating circumstances, teacher discretion will be used.
Tests and Quizzes
There will be tests and quizzes in this class to reflect the learning concepts. They will be structured as close to the AP test format as possible.
Extra Help
YOU are my first responsibility as a teacher. I will give you any guidance or assistance that I can, but you MUST come and tell me that you need help. You may attend the Social Studies Lab or see me to make an appointment before you wish to come in so I can be sure to be here.
I look forward to enjoying the semester with each of you!
Sincerely,
Mrs. Gustafson
Common Traits of Successful AP Economics Students
1) The student assumes personal responsibility for learning economics. The instructor, the text, and the study guide can not teach you economics. They are merely resources to help you learn the subject. The successful student uses each to good advantage.
2) The student brings and uses appropriate prerequisite skills in English, math, and critical thinking to the learning of economics. The ability to read the English language carefully and precisely is obviously needed. The ability to deal with algebraic concepts and simple geometry is also required for success. Finally, the successful student must be able to think critically on issues.
3) The student devotes appropriate time and energy to learning the subject. Reading the text in a skimming fashion saves time in the short run but those savings are costly over time. Successful students read the text very carefully and take notes on the concepts presented.
4) The student masters basic concepts and vocabulary before moving on to more difficult material. Economics concepts tend to build on each other, and the failure to comprehend the initial concepts guarantees problems in the future.
5) The student reinforces new knowledge. Rather than moving on to the next chapter, the successful student reads the chapter summary and discussion questions even though they may not be assigned.
6) The student prepares properly for economics examinations. The foundation of good test results is the vocabulary of the subject. Next, the basic concepts arrive, followed by the more complex relationships. Finally the practice test questions and the sample essays materialize. Only after all these are understood can the student feel prepared.
7) The student does not rely on mere memorization. While there is rote memory work in learning any subject, economics is not a set of answers to be memorized. Economics is a way of analyzing problems and predicting results.
8) The student is willing to ask for help and utilize the available resources. The student who succeeds in economics class is willing to ask questions in and out of class. That student recognizes the value of time and, rather than struggle for hours with a concept, is willing to ask questions in class or phone other students to clarify concepts.
9) The student attends class. Life is far too short not to learn all you possibly can the first time around.
10) The student sees economics in everyday life and applies class concepts to the national news and to personal decisions. In order to understand the subject thoroughly, you must use is daily. Practice makes perfect but only if you practice perfectly!
Advanced Placement Macroeconomics
Syllabus - Gustafson
Unit I. Basic Economic Concepts (8-12%)
REVIEW * 4-6 class periods- Chapters 1, (2), and 3
Topic I: Basic Economic Concepts
A. Scarcity- what is it? Why is it so important to economic thought?
B. Methodology- Explain difference between positive and normative economics. Explain many of the pitfalls to objective thinking.
C. Opportunity Cost and Choice– Define and compute it. Why can it never be avoided?
D. Production Possibilities and utilization of resources.
E. Functions of Any Economic System
1. Answering the questions: What to produce? How to produce? For whom to produce?
2. Define ways societies determine allocation, efficiency, and equity.
Topic II: Demand, Supply, and Price Determination
A. Demand (Law of Demand, determinates, change in quantity demanded v. change in demand)
B. Supply (Law of Supply, determinates, change in quantity supplied v. change in supply)
C. Equilibrium Price and Quantity (surplus, shortage, price ceiling, price floors, new equilibrium price and quantity due to shifts).
Topic III: Introduction to Macroeconomic Issues
* The class will focus on these ideas in depth in later units. The concepts listed below will be introduced as a purpose and direction for the semester.
A. Business Cycle
B. Unemployment
C. Inflation
D. Growth
1. Describe in general terms the topics listed above.
2. Explain how these topics will be a driving force in the study of Macroeconomics.
Graphs, Charts, Data
You must be able to:
1) Illustrate the concepts of scarcity, choice, cost, and economic growth.
2) Construct and interpret a production possibilities schedule and graphs.
3) Evaluate the utilization of resources within a PPC.
4) Illustrate and correctly label a demand and supply graph.
5) Evaluate the law of demand and the law of supply.
6) Show changes in demand/supply.
7) Illustrate the difference between a change in quantity demanded/supplied versus a change in demand/supply.
8) Illustrate and evaluate the effects of a price ceiling and price floor.
9) Illustrate equilibrium price and quantity.
10) Illustrate and explain changes in equilibrium price and quantity due to shifting of demand or supply curves.
11) Determine the size of a surplus or shortage.
12) Construct a demand curve, a corresponding total revenue curve, and illustrate where one would find elastic, inelastic, or unitary prices.
UNIT II. Measurement of Economic Performance (12-16%)
* 6-8 Class periods – Chapters 6 and 7
Topic I: National Income Accounts
A. Circular Flow model
B. Gross Domestic Product
1. Expenditure Approach
2. Income Approach
3. Shortcomings of GDP – Non-market transactions, distribution, kind and quality of products.
4. Real versus nominal GDP
C. * Other national accounts: Net National Product (NNP), National Income (NI), Personal Income (PI), and Disposable Income (DI).
Topic II: Unemployment and Business Cycles
A. Business cycle
B. Definition and measurement
C. Types of Unemployment (Seasonal, frictional, structural, cyclical)
D. Full Employment/ Natural Rate of Unemployment
E. * The GDP Gap – Explaining lost potential
Topic III: Inflation
A. The meaning and measurement of Inflation (nominal v. real)
B. The Consumer Price Index (CPI)
C. Problems with the CPI
D. Other indexes: Producer Price Index
E. Consequences of Inflation: shrinking incomes, changes in wealth, effect on interest rates
Graphs, Charts, Data
You must be able to:
1) Illustrate and explain a basic circular flow model.
2) Explain components of GDP and create GDP equations.
3) Calculate GDP using expenditure and income approach.
4) Explain shortcomings of GDP measurement.
5) Define and change Nominal GDP (NGDP) to Real GDP (RGDP). How and why?
6) Inflate and deflate GDP
7) Measure, calculate, and explain purpose other national accounts: Net National Product (NNP), National Income (NI), Personal Income (PI), and Disposable Income (DI).
8) Illustrate and describe the four phases of the business cycle.
9) Evaluate US GDP data over a period of years.
10) Define, explain and evaluate the unemployment rate.
11) Categorize types of unemployment.
12) Define productivity.
13) Explain and measure inflation.
14) Calculate nominal and real inflation rates.
15) Calculate and evaluate CPI and PPI
UNIT III. National Income and Price Determination (10-15%)* * 5-8 Class periods – Chapters 10, (*8 and 9)
Topic I: Aggregate Demand and Supply
A. Aggregate Demand Curve – Reasons for Its Shape
1. Real balances effect
2. Interest rate effect
3. Net export effect
B. Nonprice-Level Determinants of Aggregate Demand
C. Multiplier effect
D. Aggregate Supply Curve
1. Short run analyses
2. Sticky versus flexible wages and prices
3. Determinants of Aggregate Supply
E. Macroeconomic Equilibrium
1. Real output and price level
2. Short run
3. Actual versus full-employment output
4. Economic fluctuations
* Topic II. The Classical Theory and the Keynesian Theory: An Introduction
A. The Role of the Consumption Function
B. Marginal Propensities to Consume and Save
C. Why the Consumption Function Shifts and its Affects Aggregate Demand
D. The Role of the Investment Function
E. Why is Investment Demand unstable?
1. Expectations
3. Technological change
4. Capacity utilization
F. Investment as an Autonomous Expenditure
G. Graphing the Aggregate Expenditure Function
* Topic III: Keynesian Model in Action
A. Government Spending and How it Affects Aggregate Demand
B. Adding International Trade to the Aggregate Expenditure Model
C. The Spending Multiplier
D. Recessionary and Inflationary Gaps
Graphs, Charts, Data
You must be able to:
1) Illustrate, explain and evaluate aggregate demand and supply.
2) Illustrate and explain determinants of AD and AS.
3) Analyze macroeconomic equilibrium shifts.
4) Illustrate and explain the multiplier effect.
5) Illustrate and explain demand-pull and cost-push inflation.
6) Illustrate and explain the consumption and savings schedules
7) Calculate and explain average and marginal propensities to consume and save.
8) Illustrate, explain, and apply determinants of consumption and savings.
9) Illustrate and explain the investment demand curve and its relationship with the investment schedule.
10) Calculate the multiplier effect.
11) Illustrate, explain, and apply net exports and government spending.
12) Illustrate, explain and analyze an Aggregate Expenditures model (C+I+G+Xn).
13) Explain and analyze Recessionary and Inflationary gaps.
UNIT IV. Financial Sector (15-20%)
* 8 - 10 Class periods – Chapters 11 and 12
Topic I: Money, Banking, and Monetary Policy
A. Definition of financial assets: money, stocks, and bond
B. Time value of money (present and future value)
C. Measures of the money supply
D. Banks and creation of money
E. Money demand and supply
F. Money market
G. Loanable funds market
Topic II: Central bank and control of the money supply
A. The Federal Reserve System (FED)
1. Origins and organizational structure
2. Powers of the FED
a. Controlling the money supply
b. Clearing checks
c. supervising and regulating the banks
d. loaning currency to banks
e. acting as the bank for the U.S. government
3. Tools of the FED
a. open market operations
b. discount rate
c. reserve requirement
B. Quantity theory of money
C. Real versus nominal interest rates
Graphs, Charts, Data
You must be able to:
1) Define and calculate M1, M2, and M3.
2) Explain and calculate the purchase power of the dollar.
3) Illustrate, explain, and analyze the relationship between the demand for money and the money market.
4) Calculate a bankers balance sheet.