Macroeconomics Course Content:

The course will be taught in seven units to correspond directly with the seven topics outlined in The College Board’s AP Macroeconomics course description.

The percentages indicated reflect the approximate percentage that each topic constitutes on the multiple‐choice section of the AP Exam.

 I. Basic Economic Concepts (8‐12%)

1. Scarcity, choice, opportunity costs
2. Production possibilities curve
3. Comparative advantage, absolute advantage, specialization, and exchange
4. Demand, supply, and market equilibrium
5. Macroeconomic issues: business cycle, unemployment, inflation, growth

 II. Measurement of Economic Performance (12‐16%)

1. National income accounts
   1. Circular flow
   2. GDP
   3. Components of GDP
   4. Real vs. nominal GDP
2. Inflation measurement and adjustment
   1. Price Indices
   2. Nominal and real values
   3. Costs of Inflation
3. Unemployment
   1. Definition and measurement
   2. Types of unemployment
   3. Natural rate of unemployment

III. National Income and Price Determination (10‐15%)

1. Aggregate demand
   1. Determinants of aggregate demand
   2. Multiplier and crowding‐out effects
2. Aggregate supply
   1. Short‐run and long‐run analyses
   2. Sticky vs. flexible wages and prices
   3. Determinants of aggregate supply
3. Macroeconomic equilibrium
   1. Real output and price level
   2. Short and long run
   3. Actual vs. full‐employment output
   4. Economic fluctuations

 IV. Financial Sector (15‐20%)

1. Money, banking and financial markets
   1. Definition of financial assets: money, stocks, bonds
   2. Time value of money (present and future value)
   3. Measure of Money supply
   4. Banks and creation of money
   5. Money Demand
   6. Money market
   7. Loanable funds market
2. Central bank and control of the money supply
   1. Tools of central bank policy
   2. Quantity theory of money
   3. Real versus nominal interest rates

V. Inflation, Unemployment, and Stabilization Policies (20‐30%)

1. Fiscal and monetary policies
   1. Demand‐side effects
   2. Supply‐side effects
   3. Policy mix
   4. Government deficits and debt
2. Inflation and Unemployment
   1. Types of Inflation
      1. Demand‐pull inflation
      2. Cost‐push inflation
   2. The Phillips Curve: short run versus long run
   3. Role of expectations

VI. Economic Growth and Productivity (5‐10%)

1. Investment in human capital
2. Investment in physical capital
3. Research development, and technological progress
4. Growth Policy

VII. Open Economy: International Trade and Finance (10‐15%)

1. Balance of payments account
   1. Balance of Trade
   2. Current account
   3. Capital account
2. Foreign exchange market
   1. Demand for and supply of foreign exchange
   2. Exchange rate determination
   3. Currency appreciation and depreciation
3. Net exports and capital flows
4. Links to financial goods markets

Microeconomics Course Content:

The course will be taught in seven units to correspond directly with the seven topics outlined in The College Board’s AP Macroeconomics course description.

The percentages indicated reflect the approximate percentage that each topic constitutes on the multiple‐choice section of the AP Exam.

I. Basic Economic Concepts (8–14%)

1. Scarcity, choice, and opportunity cost
2. Production possibilities curve
3. Comparative advantage, absolute advantage, specialization, and trade
4. Economic systems
5. Property rights and the role of incentives
6. Marginal analysis

II. The Nature and Functions of Product Markets (55–70%)

1. Supply and demand (15–20%)
   1. Market equilibrium
   2. Determinants of supply and demand
   3. Price and quantity controls
   4. Elasticity
      1. Price, income, and cross-price elasticities of demand
      2. Price elasticity of supply
   5. Consumer surplus, producer surplus, and allocative efficiency
   6. Tax incidence and deadweight loss

III. Theory of consumer choice (5–10%)

1. Total utility and marginal utility
   1. Utility maximization: equalizing marginal utility per dollar
2. Individual and market demand curves
   1. Income and substitution effects
3. Production and costs (10–15%)
   1. Production functions: short and long run
   2. Marginal product and diminishing returns
   3. Short-run costs
   4. Long-run costs and economies of scale
   5. Cost minimizing input combination and productive efficiency

IV. Firm behavior and market structure (25–35%)

1. Profit
   1. Accounting versus economic profits
   2. Normal profit
   3. Profit maximization: MR=MC rule
2. Perfect competition
   1. Profit maximization
   2. Short-run supply and shutdown decision
   3. Behavior of firms and markets in the short run and in the long run
   4. Efficiency and perfect competition
3. Monopoly
   1. Sources of market power
   2. Profit maximization
   3. Inefficiency of monopoly
   4. Price discrimination
   5. Natural monopoly
4. Oligopoly
   1. Interdependence, collusion, and cartels
   2. Game theory and strategic behavior
   3. Dominant strategy
   4. Nash equilibrium
5. Monopolistic competition
   1. Product differentiation and role of advertising
   2. Profit maximization
   3. Short-run and long-run equilibrium
   4. Excess capacity and inefficiency

V. Factor Markets (10–18%)

1. Derived factor demand
2. Marginal revenue product
3. Hiring decisions in the markets for labor and capital
4. Market distribution of income

VI. Market Failure and the Role of Government (12–18%)

1. Externalities
   1. Marginal social benefit and marginal social cost
   2. Positive externalities
   3. Negative externalities
   4. Remedies
2. Public goods
   1. Public versus private goods
   2. Provision of public goods
3. Public policy to promote competition
   1. Antitrust policy
   2. Regulation
4. Income distribution
   1. Equity
   2. Sources and measures of income inequality