AP Macroeconomics Online Single Semester

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This course is the equivalent of an introductory college-level course. Students learn why and how the world economy can change from month to month, how to identify trends in our economy, and how to use those trends to develop performance measures and predictors of economic growth or decline. Students also examine how individuals and institutions are influenced by employment rates, government spending, inflation, taxes, and production. Students prepare for the AP Exam and for further study in business, political science, and history.

Chapter 1: Ten Principles of Economics

·         that economics is about the allocation of scarce resources.

·         that individuals face trade-offs.

·         the meaning of opportunity cost.

·         how to use marginal reasoning when making decisions.

·         how incentives affect people’s behavior.

·         why trade among people or nations can be good for everyone.

·         why markets are a good, but not perfect, way to allocate resources.

·         what determines some trends in the overall economy?

Chapter 2: Thinking Like an Economist

·         how economists apply the methods of science.

·         how assumptions and models can shed light on the world.

·         two simple models—the circular flow and the production possibilities frontier.

·         the difference between microeconomics and macroeconomics.

·         the difference between positive and normative statements.

·         the role of economists in making policy.

·         why economists sometimes disagree with one another.

Chapter 3: Interdependence and the Gains from Trade

·         how everyone can benefit when people trade with one another.

·         the meaning of absolute advantage and comparative advantage.

·         how comparative advantage explains the gains from trade.

·         how to apply the theory of comparative advantage to everyday life and national policy.

Chapter 4: The Market Forces of Supply and Demand

·         what a competitive market is.

·         what determines the demand for a good in a competitive market.

·         what determines the supply of a good in a competitive market.

·         how supply and demand together set the price of a good and the quantity sold.

·         the key role of prices in allocating scarce resources in market economies.

Chapter 19: Earnings and Discrimination

·         how wages compensate for differences in job characteristics.

·         the human-capital and signaling theories of education.

·         why a few superstars earn tremendous incomes in some occupations.

·         why wages rise above the level that balances supply and demand. why it is difficult to measure the impact of discrimination on wages.

·         when market forces can and cannot provide a natural remedy for discrimination.

Chapter 23: Measuring a Nation’s Income

·         why an economy’s total income equals its total expenditure.

·         how gross domestic product (GDP) is defined and calculated.

·         the breakdown of GDP into its four major components.

·         the distinction between real GDP and nominal GDP.

·         whether GDP is a good measure of economic well-being.

Chapter 24: Measuring the Cost of Living

·         how the consumer price index (CPI) is constructed.

·         why the CPI is an imperfect measure of the cost of living.

·         how to compare the CPI and the GDP deflator as measures of the overall price level.

·         how to use a price index to compare dollar figures from different times.

·         the distinction between real and nominal interest rates.

Chapter 25: Production and Growth

·         how much economic growth differs around the world.

·         why productivity is the key determinant of a country’s standard of living.

·         the factors that determine a country’s productivity.

·         how a country’s policies influence its productivity growth.

Chapter 26: Saving investment and the Financial System

·         some of the important financial institutions in the U.S. economy.

·         how the financial system is related to key macroeconomic variables.

·         the model of the supply and demand for loanable funds in financial markets.

·         how to use the loanable-funds model to analyze various government policies.

·         how government budget deficits affect the U.S. economy.

Chapter 27: The Basic Tools of Finance

·         the relationship between present value and future value.

·         the effects of compound growth.

·         how risk-averse people reduce the risk they face.

·         how asset prices are determined.

Chapter 28: Unemployment

·         the data used to measure the amount of unemployment.

·         how unemployment can result from minimum-wage laws.

·         how unemployment can arise from bargaining between firms and unions.

·         how unemployment results when firms choose to pay efficiency wages.

Chapter 29: The Monetary System

·         what money is and what functions money has in the economy.

·         what the Federal Reserve System is.

·         how the banking system helps determine the supply of money.

·         what tools the Federal Reserve uses to alter the supply of money.

Chapter 30: Money Growth and Inflation

·         why inflation results from rapid growth in the money supply.

·         the meaning of the classical dichotomy and monetary neutrality.

·         why some countries print so much money that they experience hyperinflation.

·         how the nominal interest rate responds to the inflation rate.

·         the various costs that inflation imposes on society.

Chapter 31: Open-Economy Macroeconomics: Basic Concepts

·         how net exports measure the international flow of goods and services.

·         how net capital outflow measures the international flow of capital.

·         why net exports must always equal net foreign investment.

·         how saving, domestic investment, and net capital outflow are related.

·         the meaning of the nominal exchange rate and the real exchange rate.

·         purchasing-power parity as a theory of how exchange rates are determined.

Chapter 32: A Macroeconomic Theory of the Open Economy

·         how to build a model to explain an open economy’s trade balance and exchange rate.

·         how to use the model to analyze the effects of government budget deficits.

·         how to use the model to analyze the macroeconomic effects of trade policies.

·         how to use the model to analyze political instability and capital flight.

Chapter 33: Aggregate Demand and Aggregate Supply

·         three key facts about short-run economic fluctuations.

·         how the economy in the short run differs from the economy in the long run.

·         how to use the model of aggregate demand and aggregate supply to explain economic fluctuations.

·         how shifts in either aggregate demand or aggregate supply can cause booms and recessions.

Chapter 34: The Influence of Monetary and Fiscal Policy on Aggregate Demand

·         the theory of liquidity preference as a short-run theory of the interest rate.

·         how monetary policy affects interest rates and aggregate demand.

·         how fiscal policy affects interest rates and aggregate demand.

·         the debate over whether policymakers should try to stabilize the economy.

Chapter 35: The Short-Run Trade-off between Inflation and Unemployment

·         why policymakers face a short-run trade-off between inflation and unemployment.

·         why the inflation-unemployment trade-off disappears in the long run.

·         how supply shocks can shift the inflation-unemployment trade-off.

·         the short-run cost of reducing inflation.

·         how policymakers’ credibility might affect the cost of reducing inflation.

Chapter 36: Six Debates over Macroeconomic Policy

·         the debate concerning whether policymakers should try to stabilize the economy.

·         the debate concerning whether the government should fight recessions with spending hikes or tax cuts. 

·         the debate concerning whether monetary policy should be made by rule rather than by discretion.

·         the debate concerning whether the central bank should aim for zero inflation.

·         the debate concerning whether the government should balance its budget.

·         the debate concerning whether the tax laws should be reformed to encourage saving.

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