AP MacroEconomics Mr. Crawford
MACROECONOMICS UNIT OBJECTIVES

UNIT I: BASIC ECONOMIC CONCEPTS
OBJECTIVES

1. Describe and analyze the "economic way of thinking"
2. Describe the methodology used in economics
3. Graph and interpret data
4. Graph and distinguish between inverse, direct and zero relationships
5. Graph and distinguish between constant and variable relationships
6. Identify the conditions that give rise to the economic problem of scarcity
7. Define Opportunity Cost
8. Identify the Opportunity Costs involved in various courses of action
9. Construct a Production Possibilities curve from sets of hypothetical data
10. Apply the concept of Opportunity Cost to a Production Possibilities Curve
11. Analyze the significance of different locations on, above or below a Production Possibilities Curve
12. Identify the three economic questions every economic system must answer
13. Compare and contrast the economic philosophies of Adam Smith and Karl Marx
14. Describe and analyze the economic goals of different economic systems
15. Analyze the advantages and disadvantages of different economic systems


UNIT II: MEASUREMENT OF ECONOMIC PERFORMANCE
OBJECTIVES

1. Analyze the components of the Circular Flow Diagram and use it to explain how a single purchase can influence all the Macro flows in the country
2. Describe the purpose of National Income Accounting
3. Define Gross National Product, Gross Domestic Product, Net National Product, National Income, Personal Income, and Disposable Income
4. Explain how we measure GNP and GDP
5. Explain what Goods and Services are counted in GNP and GDP as Consumption, Investment, Government Expenditures, and Net Exports
6. Compute GNP, GDP, NI, PI, and DI when given National Income Accounting data
7. Compute GNP and GDP using both the Income and Expenditure methods
8. Describe the purpose of a Price Index
9. Explain how a Price Index is calculated
10. Use a Price Index to calculate the rate of Inflation
11. Distinguish between Demand-Pull inflation and Cost-Push Inflation
12. Describe the difference between Nominal and Real GNP
13. Explain how Unemploymet is measured in the United States
14. Calculate Unemployment and Employment Rates from appropriate data
15. Differentiate between Frictional, Cyclical, Structural and Seasonal Unemployment
16. Describe the phases of the Business Cycle
17. Identify the phases of the Business Cycle when given the appropriate economic data


UNIT III: NATIONAL INCOME AND PRICE DETERMINATION
OBJECTIVES

1. Define Aggregate Demand, Aggregate Supply and Equilibrium
2. List and explain the basic causes of shifts in Aggregate Demand and Aggregate Supply
3. Graph Aggregate Demand and Aggregate Supply
4. Describe what determines the amount of goods and services produced and the level of employment in the Classical theory of Aggregate Supply-Aggregate Demand
5. Describe what determines the amount of goods and services produced and the level of employment in the Keynesian theory of Aggregate Supply-Aggregate Demand
6. Explain how Consumption and Saving are related to Disposable Income in the Keynesian model
7. Describe and calculate from given data the Marginal Propensity to Consume and the Marginal Propensity to Save
8. Describe the Multiplier
9. Given values for the marginal Propensity to Consume, calculate the values for the Multiplier
10. Calculate the change in total spending that ocurs from a given change in Business or Government expenditures when MPC is known
11. Describe Keynesian Equilibrium in words and diagrams
12. Explain the Equilibrim levels of Output and Employment in Keynesian analysis when prices are free to vary
13. Explain and show graphically how Fiscal Policy can be used to reduce and Inflationary or Recessionary Gap
14. Describe how Fiscal Policy can be used to stabilize the economy
15. Distinguish between Automatic and Discretionary Stabilizers
16. Distinguish between a Contractionary and and Expansionary Fiscal Policy
17. Evaluate Macroeconomic conditions and determine the Fiscal Policy that can be used to improve those conditions
18. Use a Keynesian 45 Total Expenditure Diagram to analyze economic problems and proposed solutions to those problems
19. List and explain the complications encountered in employing Fiscal Policy


UNIT IV: MONEY AND BANKING
OBJECTIVES

1. Define and explain the functions of money
2. Explain what determines the value of money
3. Define and contrast the definitions of M1, M2, and M3
4. Define and compare Required Reserves and Excess Reserves
5. Explain how the banking system creates money
6. Calculate the Money Multiplier and money growth possible from a given value of Excess Reserves
7. Describe the organizational structure of the Federal Reserve System
8. Define and explain Open Market Operations
9. Explain how Open Market Operations, the Discount Rate, and the Reserve Requirement are used to expand or contract the money supply
10. Evaluate the effectiveness of the three main tools of Monetary Policy
11. Write and explain the Equation of Exchange
12. Compare and contrast the Keynesian and Monetarist views
13. Given a series of data, identify the economic problem and prescribe the proper Monetary Policy to correct that problem
14. Identify the economic problems and recommend Monetary and Fiscal policies to improve economic performance when given economic statistics
15. Use Aggregate Demand and Aggregate Supply to analyze the economic problems and proposed solutions to those problems
16. Analyze the tradeoffs involved in various economic policy prescriptions
17. Use a Phillips Curve to illustrate tradeoffs between inflation and unemployment in the short run and the long run
18. Compare and contrast the effectiveness of Monetary and Fiscal Policy as tools of economic stabilization
19. State the assumptions, values, theoretical support, and applicable time periods underlying recommendations concerning Monetary and Fiscal Policies that are in conflict
20. Describe and discuss the essence of the Classical, Keynesian, Monetarist, Supply-Side, Rational Expectations, and Neo-Classical theories
21. Compare and contrast the theoretical support for the policy prescriptions of these theories
22. Discuss the various problems and tradeoffs that policymakers face in the real world


UNIT V: INTERNATIONAL ECONOMICS AND GROWTH
OBJECTIVES

1. Define Comparative and Absolute Advantage
2. Describe and give examples of the Law of Comparative Advantage
3. Define Specialization and Exchange
4. Explain how both parties to a trade gain from voluntary exchange
5. Explain Comparative Advantage in terms of Opportunity Cost
6. When given necessary data, compute the costs of producing two commodities in two countries, determine which nation has the Comparative Advantage in the production of each commodity, calculate the trading ratio, and explain the gains to each nation and the world from Specialization and Trade
7. Describe and evaluate the case for Free Trade
8. Describe and evaluate the case for Protectionism
9. Describe the Balance of Payments
10. Describe how Exchange Rate Systems work and convert currency using current exchange rates
11. Describe the effects of Depreciating or Appreciating Curency Rates on a nation's imports and exports

Return to AP Economics Home Back to AP MacroEconomics Schedule