DP Economics I
Description of Course Activities:
Advanced Placement Macroeconomics and Microeconomics is designed to engage students in intellectual, critical, and creative process of thinking skills from in class discussion, individual projects, and hands on problem solving. Advanced Placement Macroeconomics and Microeconomics requires extensive reading, research, and problem solving responsibility from the student. The course will give students a thorough understanding of the principles of macroeconomics and microeconomics such as fiscal and monetary policy, aggregate demand and supply, output, price determination, national income, performance measures, and the global economy, the nature and functions of markets, the theory of the firm, elasticity of demand and supply, resource markets, wage determination, and the role of government. The goal is for students to be prepared to take the college level examinations and to make the student interested and excited about learning the field of Macroeconomics and Microeconomics.
Advanced Placement Macroeconomics and Microeconomics follows the curriculum of the Advanced Placement Board and the Texas Education Agency.
Course Objectives and Student Outcomes
· Students will be prepared to do acceptable work on the AP Macroeconomics Exam.
· Explain various economic models including Keynesian and Classical
· Explain government economic indicators and their application to the national economy
· Understand the various aggregate supply/demand to the national economy
· Cause and effect of how one countries economic polices has an impact on our country
· Understand the impact of the Federal Reserve Bank on economic policy
Text Book:
McConnell, Campbell and Stanley Brue. Economics: Principles, Problems, and Policies, 15th ed. McGraw-Hill/Irwin, 2002.
Grading Policy
Grading Scale for each Nine Weeks Average
*AP Multiple Choice Quizzes, Labs, Projects, and Free Response Questions 40%
*Tests (Multiple choice and free response) 60%
*Multiple choice quiz, exam, and free response questions will be taken from released AP Macroeconomics exams from the Advanced Placement College Board
Macroeconomics Course Outline
I. Basic Economic Concepts
a. Define and Identify – scarcity and unlimited wants and limited recourses (land, labor, capital, entrepreneurships)
b. Identify – trade-offs and opportunity cost, Production Possibilities Curve
d. Students will draw, graph, and interpret the PPC as it relates to trade offs,
choices, historical conditions, and reaching points outside.
e. Comparative and Absolute Advantage, Specialization, and Exchange: Distinguish and Illustrate between absolute and comparative advantage and calculate product exchange.
f. Introduction to Demand, Supply, and Market Equilibrium: students will construct graphs illustrating demand, supply, and equilibrium price.
1. Distinguish between a change in demand and quantity demanded.
2. Distinguish between a change in supply and quantity supplied.
3. Graph a demand and supply curve showing price, quantity, equilibrium.
4. Explain determinates of demand and supply, explain and show direction of curve shift of demand and supply and its importance.
5. Students will draw, graph, and illustrate a correctly labeled demand and supply graph, showing changes in different economic conditions.
II. Measurement of Economic Performance
a. National Income Concepts: Circular Flow Model, Measuring the GDP, and Components of the GDP, Business Cycles.
1. Students will identify, illustrate, and explain the Circular Flow Model showing the resource market, product market, business, households, and government
2. Students will identify and explain, graph, and calculate the Expenditure Approach of GDP: C + Ig + G + Xn.
3. Students will identify and explain the Income Approach of GDP: W + I + R + P
4. Students will identify and calculate the Nominal GDP and the Real GDP using a base year, students will also identify the GDP Deflator. Students will also be introduced to the Consumer Price Index as a comparison to the GDP.
5. Identify and calculate the net domestic product (NDP), national income (NI), personal income (PI), and disposable income (DI)
6. Students will graph and identify the four phases of the business cycle: Trough, Expansion, Peak, and Contraction.
7. Identify the Underground Economy
8. Introduction to Consumption Function Graph and Marginal Propensities of consumption and savings, Students will use MPC & MPS formulas to calculate equations.
b. Inflation Measurement and Adjustment
1. Identify the Consumer Price Index and when released and by what government agency, and how it is calculated.
2. Identify problems with the Consumer Price Index and compare with the GDP.
3. Identify the Producer Price Index.
4. Identify Demand-Pull and Cost Push Inflation, Hyperinflation, Deflation, Stagflation, and historical and current event examples.
5. Identify: Who is hurt by Inflation? Who is helped by Inflation? Identify COLA.
c. Unemployment
1. Identify and Define types of Unemployment: frictional, structural, cyclical and seasonal.
2. Identify measurement of unemployment: Who is counted and who is not?
3. Identify full employment: Introduction to full employment and LRAS on AD/AS graph.
4. Identify and define underemployment, discouraged job seekers,
5. Identify the Natural Rate of Unemployment.
III. National Income and Price Determination
Aggregate Demand, Aggregate Supply, Macroeconomic Equilibrium
a. Aggregate Demand and Aggregate Supply – Students will graph, illustrate, and correctly label an Aggregate Demand and Aggregate Supply graph showing full employment, price level and output.
b. Students will identify and graph Recession and Inflation on an AD/AS graph.
c. Students will identify determinates of Aggregate Demand.
d. Students will identify determinates of Aggregate Supply.
e. Students will graph and identify short run and long run Aggregate Supply.
f. Students will identify Crowding out effects on AD/AS and multipliers of: Introduction to Fiscal Policy and government spending.
g. Students will identify the impact of Technological change and introduction of Supply Shocks.
h. Introduction to Classical Theory and Keynesian Theory
i. Students will graph AD/AS using three range Aggregate Supply Curve
IV. Financial Sector
Money, Banking, and Financial Markets
a. Students will identify functions of money: medium of exchange, standard of value, store of value.
b. Identify Money Supply Definitions: M1, M2, and M3.
c. Identify a Money Market, Stocks and ownership, Bonds and debts.
d. Identify Banks and the creation of money.
e. Discuss the present and future value of money.
f. Introduction to the Loanable Funds Market.
Central Bank and Control of the Money Supply
a. Students will identify the Federal Reserve System (FED) and its current chairman. Students will research different branches and structures of system.
b. Identify the importance of the FED: U.S. bank, local banks borrow from, regulation of banks, increasing and decreasing the money supply, clearing checks.
c. How Does the FED control the Money Supply? Reserve Requirement, Discount Rate, Open Market Operations.
d. Identify Real Interest Rate and Nominal Interest Rate – individual importance of staying ahead of inflation in savings.
V. Inflation, Unemployment, Stabilization Policies
Fiscal Policy and Monetary Polices
a. Students will identify Discretionary Fiscal Policy.
1. Changes in government spending in recession and high inflationary periods.
2. Changes in government tax rates in recession and high inflationary periods.
3. Identify the Laffer Curve.
4. Identify government deficits and debt.
5. Supply Side effects and Environmental Regulations.
6. Review Classical and Keynesian Theory with historical significance.
b. Review Crowding Out.
c. Students will identify Monetary Policy.
1. Students will analyze Short Run and Long- Run effects of Monetary policy.
2. Review the three tools of the FED.
3. Identify Monetarist theory and MV=PQ.
d. Students will graph crowding out effect and the Laffer curve.
Inflation and Unemployment
a. Review of types of inflation: Cost-Push and Demand Pull.
b. Students will graph and interpret the short run and long run Phillips. Curve and identify its historical importance.
c. Discuss Rational Expectations Theory.
VI. Economic Growth and Productivity
a. Investment of Human Capital – Knowledge and Skills to make a productive worker.
b. Investment in Physical Capital – Machinery and Buildings.
c. Research and Development, and Technological progress – Inventions and Products.
d. Growth Policy – Importance of healthy Long-Run Growth.
VII. Open Economy: International Trade and Finance
Balance of Payments Accounts
a. Review of Comparative and Absolute Advantage.
b. Identify Balance of Trade in international trade and financial transactions.
c. Identify Current Account.
d. Identify Capital Account.
Foreign Exchange Market, Net Exports and Capital Flows,
Financial and Goods Market
a. Students will graph currency changes and research current currency exchange rates.
b. Identify the Demand for and Supply of Foreign Exchange.
c. Identify current Currency appreciation and depreciation in the Foreign Exchange Market.
d. Identify trade barriers, free trade and protectionism.
e. Identify international trade agreements: NAFTA, EU, WTO.
f. Compare difference in international trading partners – Capitalist, Socialist, developed and developing countries.
g. Discuss and identify outsourcing and the changing world economy.
Microeconomics Course Outline:
I. Introduction to Economics
a. Methodological issues in economics
i. Positive and normative economics
ii. Microeconomics and macroeconomics
iii. Using mathematical and graphical methods to analyze an economic issue
b. Scarcity: the nature of economic systems
c. Production possibilities and opportunity costs
d. Specialization, comparative advantage, and exchange
e. The functions of an economic system (what, how, and for whom) with applications to alternative economic systems
i. Traditional
ii. Command
iii. Market
II. The Nature and Functions of Markets
a. Demand
i. Relationship between price and quantity demanded
ii. Determinants of demand
iii. Changes in quantity demanded vs. change in demand
iv. Introduction to elasticity of demand
b. Supply
i. Relationship between price and quantity supplied
ii. Determinants of supply
iii. Changes in quantity supplied vs. change in supply
iv. Introduction to elasticity of supply
c. Equilibrium
i. Why price and quantity move toward equilibrium
ii. Shifts in supply and demand
iii. Surpluses and shortages
iv. Real-world applications of supply and demand
d. Markets as coordinators
i. Information function
ii. Incentive function
iii. Rationing function
e. Elasticity of supply and demand
i. Demand
1. Total revenue method
2. Coefficient method
3. Determinants of elasticity of demand
4. Applications of elasticity of demand
ii. Supply
1. Time periods
2. Applications
III. The Theory of the Firm
a. Consumer choice and individual consumer demand
i. Introduction to consumer behavior
ii. Marginal utility analysis
iii. Derivation of individual demand curves
iv. Derivation of market demand curves
b. Firm production and costs
i. Introduction to firm behavior
ii. Marginal profit analysis
iii. Average and marginal costs
iv. Average and marginal revenues
c. Product pricing and outputs, both individual firm and market
i. Perfect competition and derivation of supply
ii. Monopoly
iii. Other forms of imperfect competition
1. Oligopoly
2. Monopolistic competition
d. Efficiency and government policy toward imperfect competition
IV. Resource Markets
a. Marginal productivity and factor demand
i. Resource demand as derived demand
ii. Marginal revenue product
iii. Rule for employing resources MRP=MRC
iv. Changes in resource demand
b. Determination of wages
i. Perfect factor markets
ii. Imperfect factor markets
c. Determination of rent, interest, and profit
V. The Role of Government
a. Public choice analysis
b. Government and the allocation of resources
i. Externalities
ii. Public goods
c. Government and redistribution of income
i. Overview – distribution of income
ii. The effects of taxation on the distribution of income (tax incidence)
1. Progressive taxes
2. Regressive taxes
3. Proportional taxes
d. The effects of government expenditures on the distribution of income
Detailed Syllabus
Quarter 1
Week 1, 08/09 – 08/12: Scarcity, PPC, Circular Flow. Quiz.
Week 2, 08/15 – 08/19: Demand, Supply. Quiz.
Week 3, 08/22 – 08/26: Supply and Demand. Exam 1
Week 4, 08/29 – 09/02: Comparative Advantage. Quiz.
Week 5, 09/06 – 09/09: Foreign Exchange. Exam 2.
Week 6, 09/12 – 09/16: Loanable Funds. Quiz.
Week 7, 09/19 – 09/23: GDP. Quiz.
Week 8, 09/26 – 09/30: Unemployment. Exam 3.
Week 9, 10/03 – 10/06: Inflation. Quiz.
Quarter 2
Week 1, 10/11 – 10/14: Aggregate Demand. Quiz.
Week 2, 10/18 – 10/21: Aggregate Supply. Quiz.
Week 3, 10/25 – 10/28: Aggregate Demand and Supply. Exam 4.
Week 4, 10/31 – 11/04: Fiscal Policy. Quiz.
Week 5, 11/07 – 11/11: Phillips Curve. Exam 5.
Week 6, 11/14 – 11/18: Money and Banking. Quiz.
Week 7, 11/28 – 12/02: Monetary Policy. Exam 6.
Week 8, 12/05 – 12/09: Protectionism and Tariffs. Quiz.
Week 9, 12/12 – 12/16: International Sector. Quiz.
Week 10, 12/19 – 12/21: Semester Exams.
Quarter 3
Week 1, 01/10 – 01/13: Elasticities. Quiz.
Week 2, 01/17 – 01/20: Taxation. Quiz.
Week 3, 01/23 – 01/27: Costs of Production. Exam 7.
Week 4, 01/30 – 02/03: Perfect Competition. Quiz.
Week 5, 02/06 – 02/10: Perfect Competition. Quiz.
Week 6, 02/13 – 02/17: Pure Monopoly. Exam 8.
Week 7, 02/21 – 02/24: Pure Monopoly, Price Discrimination. Quiz.
Week 8, 02/27 – 03/03: Monopolistic Competition. Exam 9.
Week 9, 03/06 – 03/09: Oligopoly. Quiz.
Quarter 4
Week 1, 03/20 – 03/24: Market Failures. Quiz.
Week 2, 03/27 – 03/31: Externalities. Exam 10.
Week 3, 04/03 – 04/07: Resource Markets. Quiz.
Week 4, 04/10 – 04/14: Resource Markets. Exam 11.
Week 5, 04/17 – 04/21: Review.
Week 6, 04/24 – 04/28: Mock Exam.
Week 7, 05/01 – 05/05: Review.
Week 8, 05/08 – 05/12: AP Exams.
Week 9, 05/15 – 05/19: Portfolio Practice.
Week 10, 05/22 – 05/26: Final Exams.