Course Description:  The goal of the AP Macroeconomics one semester course is to give students a thorough understanding of the principles that apply to an economic system as a whole. Emphasis will be placed on the study of national income, the financial sector, economic performance measures, and international economics. The course is designed to prepare students to take the AP Macroeconomics Exam in May. Additionally, the rigorous workload and pace of the course will help prepare students for college level study.

An “economic way of thinking” is beneficial for an individual in private life and directly applicable to a variety of career fields. The National Council on Economic Education has outlined nine principles of “economic thinking.” This course is intended to foster this type of thinking for lifelong use. The NCEE Nine Principles of Economic Thinking are:

• Everything has a cost
• Incentives matter
• People choose for good reasons
• People create economic systems to influence choices and incentives
• Economic actions carry secondary effects
• People gain from voluntary trade
• Economic thinking is marginal thinking
• The price of a good or service is affected by people’s choices
• The test of a theory is its ability to predict

The AP Macroeconomics course at x School has been designed according to the course description set forth by The College Board, who administers the AP Macroeconomics Exam in May.  The AP Macroeconomics course at x High School addresses the NJ Core Curriculum Social Studies Content Standard 6.5 for Economics. Further, the AP Macroeconomics course at x High School has been designed to address the 20 Voluntary National Content Standards in Economics developed by The National Council on Economic Education and the Foundation for the Teaching of Economics.

Course Texts and Materials:

• Course Text: Ray and Anderson, Krugman’s Economics for AP, 1st Edition
• Supplemental articles from The New York Times, The Wall Street Journal, The Economist, and The Atlantic Monthly
• Supplemental readings shall included but not be limited to selections from the writings of    Smith, Marx, Keynes, Friedman and other economists
• Morton, Advanced Placement Economics
• Economics U$A, Annenberg/ CPB Collection
• Paul Solomon Videos / Discover Econ DVD

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.

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

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
2. Money market
3. Loanable funds market
4. 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
3. The Phillips Curve: short run versus long run
4. 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