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Basic Economic Concepts AP Course Audit AP Macroeconomics Unit 1 BASIC ECONOMIC CONCEPTS TIME: 8 days Economics Productive Efficiency Absolute Advantage Macroeconomics Allocative Efficiency Terms of Trade Microeconomics Production Possibilities Curve Economic System Ceteris Paribus Consumer Goods Market System KEY TERMS: Scarcity Economic Growth Command System Tradeoffs Comparative Advantage Traditional System Opportunity Costs Full Production Circular Flow Model Factors of Production Utility Marginal Cost / Benefits Self-Interest 1. Define Economics. 2. Explain the relationship between scarcity and unlimited wants and how it relates to economics. 3. Identify types of economic resources and types. 4. Differentiate between full employment and full production. 5. Explain the difference between self-interest and trade 6. Explain the concepts of allocative and productive efficiency and how they differ. 7. Calculate opportunity costs. 8. Graph production possibilities curve.. 9. Explain regions of the PPC and what might cause shifts. 10. Give examples of underallocation and overallocation of resources. LEARNING 11. Differentiate between absolute advantage and comparative advantage. 12. State the case for free trade from an economic perspective. OBJECTIVES: 13. Compute absolute advantage when given data for two commodities in two countries. 14. Compute comparative advantage when given data for two commodities in two countries. 15. Calculate the potential gain from trade and specialization for each nation and the world when given appropriate data. 16. Determine favorable terms of trade. 17. Highlight main features of free market and command economies. 18. Apply the marginal costs / benefits model to everyday decisions 19. Differentiate between value and utility 20. Identify the decision makers and the markets in a markets system using the circular flow diagram. 21. Label the circular flow model and explain. Production Possibilities Curve GRAPHS Circular Flow Model 1. McConnell, Campbell, and Stanley Brue. Macroeconomics: Principles, Problems and Policies, 15th edition. McGraw-Hill Irwin, 2002. Chapter 1 (The Nature and Method of Economics) Chapter 2 (The Economizing Problem) Chapter 6 (pp 98-101; Comparative and Absolute Advantage) READINGS: 2. Buchholz, Todd. New Ideas from Dead Economists. New York: Penguin Group, 1999. Chapters 2 (Adam Smith) 3. Wheelan, Charles. Naked Economics. New York: WW Norton, 2003. Pp. 22-28 4. Williams, Walter. “Economics for the Citizen.” Capitalism Magazine (online). 1 AP Course Audit AP Macroeconomics Unit 1 BASIC ECONOMIC CONCEPTS (CONT) 1. Macroeconomics (McConnell & Brue) Textbook Study Questions: Chapter 2 (Page 37): 5, 6, 10, 11, 12, 13 2. Worksheets: . AP Macroeconomics: Student Activities 3rd Edition (National Council on Economic Education) o Unit 1; Activity 1: Scarcity, Opportunity Cost and PPC o Unit 1; Activity 2: Opportunity Cost and Comparative Advantage . Walastad, William and Robert C. Bingham. Study Guide: Macroeconomics: Principles, Problems, and Policies. McGraw-Hill Irwin, 2002. (Study guide that REINFORCEMENT accompanies McConnell & Brue Textbook): Chapter 1 (The Nature and Method of Economics) ACTIVITIES: o o Chapter 2 (The Economizing Problem) 3. Videos: . Economics Made Memorable with Paul Solman. o Opportunity Costs 4. Simulations: . Measuring Utility (Using an online catalog) . Lifeboat Activity (Opportunity Cost) 5. Other: . Discussing current events from Wall Street Journal and The Economist ASSESSMENT Textbook Computer Generated Multiple Choice Test. McGraw-Hill Software. 2 AP Course Audit AP Macroeconomics Unit 2 INDIVIDUAL MARKETS TIME 9 days Market Substitute Goods Change in Quantity Supplied Demand (Dollar Votes) Complementary Goods Market Equilibrium Law of Demand Change in Demand Surplus Diminishing Marginal Utility Change in Quantity Shortage KEY TERMS: Income Effect Demanded Price Floor Demand Curve Supply Law of Supply Price Ceiling Determinants of Demand Supply Curve Elasticity of Demand Normal Goods Determinants of Supply Price War Inferior Goods Change in Supply Demand Elasticity 1. Define “market”. 2. Identify why price and quantity demanded are inversely related. 3. Differentiate between demand and quantity demanded. 4. State Law of Demand. 5. List the major determinants of demand. 6. Identify why price and quantity supplied are directly related. 7. Differentiate between supply and quantity supplied. 8. State Law of Supply. 9. List the major determinants of supply. LEARNING 10. Graph supply and demand curves. OBJECTIVES: 11. Using a graph, locate equilibrium price and quantity. 12. Explain effects of changes in demand and supply on equilibrium price. 13. Using data, determine surpluses and shortages. 14. Using a graph, determine surpluses and shortages. 15. Define price floors and price ceilings and provide examples of each. 16. Explain market consequences of price floors and price ceilings. 17. Calculate elasticity of demand. 18. Determine if a product has elastic or inelastic demand by calculating elasticity. 19. Determine how a price war between businesses benefits consumers FORMULAS: Elasticity of Demand GRAPHS Supply & Demand 1. McConnell, Campbell, and Stanley Brue. Macroeconomics: Principles, Problems and Policies, 15th edition. McGraw-Hill Irwin, 2002.: Chapters 3 (Individual Markets) READINGS: 2. Williams, Walter. “Minimum Wage, Maximum Folly.” Capitalism Magazine (online). 3 AP Course Audit AP Macroeconomics Unit 2 INDIVIDUAL MARKETS (CONT) 1. Macroeconomics (McConnell & Brue) Study Questions: Chapter 3 (Page 56): 1, 2, 7,11 2. Worksheets: . AP Macroeconomics: Student Activities (National Council on Economic Education): o Unit 1; Activity 3: Demand Curves, Movements Along Demand Curves and Shifts in Demand Curves o Unit 1; Activity 4: Reasons for Changes in Demand o Unit 1; Activity 6: Reasons for Changes in Supply o Unit 1; Activity 7: Equilibrium Price and Equilibrium Quantity . Walastad, William and Robert C. Bingham. Study Guide: Macroeconomics: Principles, Problems, and Policies. McGraw-Hill Irwin, 2002. (Study guide that REINFORCEMENT accompanies McConnell & Brue Textbook): ACTIVITIES: o Chapter 3 (Individual Markets) 3. Videos: . Dead Meat (an online documentary about the shortages in Canada’s Health Care system . Economics Made Memorable with Paul Solman. o Supply and Demand o Elasticity 4. Simulations: . Lemonade Stand (Equilibrium Price, Surplus, Shortage) 4. Other: * Discussing current events from Wall Street Journal and The Economist ASSESSMENT Textbook Computer Generated Multiple Choice Test. McGraw-Hill Software. 4 AP Course Audit AP Macroeconomics Unit 3 US ECONOMY & THE MARKET SYSTEM TIME 10 days Division of Labor Bonds Deficit Specialization Limited Liability Surplus Normal Profit Double Taxation Fiscal Year Economic Profit Principle-Agent Problem Balanced Budget “Invisible Hand” Monopoly Personal Income Tax Durable Goods Oligopoly Corporate Income Tax KEY TERMS: Nondurable Goods Spillover Costs Sales Tax Services Spillover Benefits Excise Tax Sole Proprietorship Exclusion Principle Property Taxes Partnership Private Goods National Debt Corporation Public Goods Stocks Transfer Payments 1. List and explain characteristics of the American market system. 2. List basic economic questions every economic system must answer. 3. Difference between normal profits and economic profits. 4. Describe the guiding function of prices. 5. The role of competition and the “invisible hand”. 6. Explain difference between durable goods and nondurable goods LEARNING 7. Explain how the government alters income distribution. OBJECTIVES: 8. Define and explain spillover benefits and costs. 9. Explain the methods the government can use to reduce unemployment and inflation. 10. Understand the enhanced circular flow model with the government sector. 11. Identify major categories of government spending. 12. Identify the difference between the national debt and a deficit. FORMULAS: None Circular Flow Model (w/ Government Sector Included) GRAPHS 5 AP Course Audit AP Macroeconomics Unit 3 US ECONOMY & THE MARKET SYSTEM (CONT) 1. McConnell, Campbell, and Stanley Brue. Macroeconomics: Principles, Problems and Policies, 15th edition. McGraw-Hill Irwin, 2002.: Chapter 4 (The Market System) Chapter 5 (The US Economy) 2. Buchholz, Todd. New Ideas from Dead Economists. New York: Penguin Group, 1999. READINGS: Chapter 4: David Ricardo and the Cry for Free Trade 3. “In the Debate Over Tax Policy, the Power of Luck Shouldn’t Be Overlooked” NY Times Hal Varian 4. Wheelan, Charles. Naked Economics. New York: WW Norton, 2003. pp. 18-21 / 43-61 1. Macroeconomics (McConnell & Brue) Study Questions: Chapter 4 (Page 71): 2, 4,9, 10 Chapter 5 (Page 90): 6, 9, 11, 12, 14 2. Worksheets: . AP Macroeconomics: Student Activities (National Council on Economic Education): o Unit 2; Activity 10: Understanding the Circular Flow of the Macroeconomy . Walastad, William and Robert C. Bingham. Study Guide: Macroeconomics: Principles, Problems, and Policies. McGraw-Hill Irwin, 2002. (Study guide that REINFORCEMENT accompanies McConnell & Brue Textbook): ACTIVITIES: o Chapter 4 (The Market System) Chapter 5 (The US Economy) 3. Videos: . Wal-Mart: The High Costs of Low Prices . Is America #1? Stossel in the Classroom 4. Simulations: . Stock Market Simulation . Bartering Activity 5. Other: . Discuss current events from Wall Street Journal and The Economist ASSESSMENT Textbook Computer Generated Multiple Choice Test. McGraw-Hill Software. 6 AP Course Audit AP Macroeconomics Unit 4 THE FOREIGN EXCHANGE MARKET TIME 6 days
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