Chantilly High School 2003 – 2004



BWHS Advanced Placement Economics 2014- 2015Instructor: Steve Celio (steve.celio@)ResourcesTextbook: McConnell, C. and Brue, S. (2009). Economics, 18th Edition, New York: McGraw-Hill.Textbook supplement: Ellison, L. (2009). AP Achiever: Advanced Placement exam prep guide for microeconomics and macroeconomic. New York: McGraw-Hill.Outside reading, Semester 1: Hazlitt, Henry (1988 reprint). Economics in One Lesson.Outside reading, Semester 2: Wheelan, Charles (2002).Naked economics. New York: Norton.Course Overview and Objectives:Economics is about how we, as a society, allocate scarce resources. Who gets what? How much? When? At what price? Who makes it? These are all questions that economists answer. In this class, you will be taking TWO college courses and preparing for TWO AP exams. Our first goals are to become economically literate, and to learn how to improve decision making through economic thinking. By working to meet those goals, you will be well prepared for both exams. Advanced Placement Economics is a full year course. We will run on a college semester schedule, i.e. Microeconomics will be covered from September-December, and Macroeconomics from January through April, with May reserved for Exam Review. The full course outline is available through Mr. Celio’s CMS page and Vision course.Microeconomics. The central goal in this course is to help students gain an understanding of and appreciation for the principles of economics that affect how individuals, households and businesses make economic decisions. Students will learn how to generate charts and graphs to describe economic concepts. Exam date: May 15, 2015, 8:00 AM.Macroeconomics. The central goal in this course is to help students gain an understanding of and appreciation for the principles of economics that apply to the American economic system as a whole. Students will study the nature and functions of product markets and particular emphasis will be placed on national income, fiscal and monetary policy, economic performance measures, economic growth and open economies. Exam date: May 14, 2015, 12:00.Course Resources and Requirements:You must sign up for BWHS AP Economics on Loudoun Vision. This is required as it is the preferred means of communication, and some resources and assignments will be made available primarily through this site. You will also need to have a account and should sign up for “Remind” (Formerly Remind 101). Directions and passwords for all of these will be provided in class. You will need a three-ring binder to organize course materials. The front page will be the table of contents. All work will be logged on this this in the order that it is given, and points possible and points earned should be added as well. The actual assignments will be numbered and placed in the correct order behind the table of contents. This will be collected and reviewed for a grade near the end of the quarter, but the main purpose of the assignment is to enhance your organization and aid your success in this course.Quarterly schedules will be provided for you and available through Mr. Celio’s CMS and Vision pages. There is no reason that students should ever be unaware of assignments being due. The Remind system will be utilized as well in the case of major assignments and changes. Grading:Category% of gradeBrief descriptionDaily “frames”0Writing/graphing exercises to reinforce key concepts and identify areas where clarification or re-teaching may be necessaryClassroom activities10Worksheets, free responses, etc., done individually or in pairs. Sometimes graded on performance, sometimes on completion. Students may be assigned to complete these as homework.Chapter quizzes20Generally 10 questions on each chapter, includes reading and vocab questionsProblem sets15One per unit, serves as concept reinforcement and test reviewUnit Tests35Cover between 3-5 chapters 60 MC questions, 1-2 FRQs Projects15One per quarter, based on books or articlesNotebook5Graded on completion, for organizational purposesClassroom Expectations and Policies:Be on time, be prepared, and be polite.All school rules (e.g. Honor Code, tardy policy, phone/iPod rules, etc.) will be enforced in class.Economics class is the time for economics work, students should remain focused and on-task.Keep up with your reading and outline your chapters. There are also many practice options on-line and in the review book to reinforce your learning. Do your homework! You are also expected to complete any work that we do not finish during class.If you do not understand something ASK QUESTIONS. We need to correct misunderstandings as they arise. Correct mistakes in your assignments.All work is due at the beginning of class on the day identified on the quarterly schedules. These dates will only change in the case of extenuating circumstances such as snow days.Students who miss class are expected to turn in any assignments that were due as soon as they return to class. Turning it in at this time is the student’s responsibility, if they fail to do so it will be treated as late work. Late work policy: For tests/quizzes missed for excused absences/tardiness, the student is responsible for scheduling a make-up time to be completed within one week of their return to class. Failure to do so will result in a grade of 50% being assigned. Missed test or quizzes for unexcused absences or tardiness will result in a grade of 50% being assigned.The notebooks and projects will be due on the dates identified on the calendar, and will be assessed a 25-point penalty for each day they are late.In-class activities and homework assignments, including problem sets, will not be accepted late except in the cases of excused absences. A grade of 20% will be given for missed homework assignments.Students should monitor their grades via Clarity, and notify Mr. Celio of any discrepancies via email (to allow him to have a record of the issue) as soon as they become aware of it. Due to the timing and structure of the course, all students, including seniors, will take the mid-term and final exam. Seniors who meet the LCPS Exam Exemption criteria will have the option of not counting their exam, or counting it if it improves their final grade.Acknowledgement of Class Policies for AP EconomicsClassroom Expectations and Policies:Be on time, be prepared, and be polite.All school rules (e.g. Honor Code, tardy policy, phone/iPod rules, etc.) will be enforced in class.Economics class is the time for economics work, students should remain focused and on-taskKeep up with the reading and outline your chapters. There are also many practice options on-line and in the review book to reinforce your learning. Do your homework! You are also expected to complete any work that we do not finish during class.If you do not understand something ASK QUESTIONS. We need to correct misunderstanings as they arise. Correct mistakes in your assignments.All work is due at the beginning of class on the day identified on the quarterly schedules. These dates will only change in the case of extenuating circumstances such as snow days.Students who miss class are expected to turn in any assignments that were due as soon as they return to class. Turning it in at this time is the student’s responsibility, if they fail to do so it will be treated as late work. Late work policy: For tests/quizzes missed for excused absences/tardiness, the student is responsible for scheduling a make-up time to be completed within one week of their return to class. Failure to do so will result in a grade of 50% being assigned. Missed test or quizzes for unexcused absences or tardiness will result in a grade of 50% being assigned.The notebooks and projects will be due on the dates identified on the calendar, and will be assessed a 25-point penalty for each day they are late.In-class activities and homework assignments, incuding problem sets, will not be accepted late except in the cases of excused absences. A grade of 20% will be given for missed homework assignments.Students should monitor their grades via Clarity, and notify Mr. Celio of any discrepancies via email (to allow him to have a record of the issue) as soon as they become aware of it. Due to the timing and structure of the course, all students, including seniors, will take the mid-term and final exam. Seniors who meet the LCPS Exam Exemption criteria will have the option of not counting their exam, or counting it if it improves their final grade.I understand the aforementioned expectations and policies for AP Economics, and will abide by them.________________________________________________________________NameDate_________________________________________________________________Signature Phone # (optional)Key vocab terms: (these are the most significant terms in each chapter, but this is not a comprehensive list of what you need to know)Chapter 1: Economics, utility, marginal utility, scarcity, opportunity cost, production possibilities curve, capital goods, consumer goods, economic growth, factors of production (identify), comparative advantageChapter 2: Money, barter, command economy, market economy, competition, invisible hand, dollar votesChapter 4: Durable v. non-durable goods, monopoly, externality, public good, free-rider problem, transfer payment, externality, marginal tax rates, excise taxChapter 3: Demand, law of demand, diminishing marginal utility, income effect, substitution effect, inferior goods, normal goods, substitute good, complementary goods, supply, determinants of supply, equilibrium price/quantity, surplus, shortage, productive efficiency, allocative efficiencyChapter 6: Price elasticity of demand, unit elasticity, elastic demand, inelastic demand, perfectly elastic demand, perfectly inelastic demand, total revenue test, price elasticity of supply, market period, short run, long run, cross-elasticity of demand, income elasticity of demand, consumer surplus, producer surplus, efficiency lossChapter 7: Utility, law of diminishing marginal utility, total utility, marginal utility, rational behavior, budget constraints, consumer equilibrium, income effect, substitution effectChapter 8: Opportunity cost, explicit costs, implicit costs, normal profit, economic profit, total product, marginal product, average product, law of diminishing returns, fixed costs, variable cost, total cost, marginal costs, economies of scale, returns to scale, minimum efficient scale, natural monopolyChapter 9: Pure competition, imperfect competition, price taker, average revenue, total revenue, marginal revenue, break- even point, MR=MC rule, short-run supply curve, constant-cost industry, increasing cost industry, [productive efficiency, allocative efficiency, consumer surplus, producer surplus in context]Chapter 10: Pure monopoly, barriers to entry, simultaneous consumption, network effects, X-inefficiency, price discrimination, socially optimal price, fair-return priceChapter 11: Monopolistic competition, product differentiation, non-price competition, Four-firm concentration ratio, Excess capacity, oligopoly, Mutual interdependence, game theory, collusion, price war, cartelChapter 12: Derived demand, marginal product, marginal revenue product, marginal resource cost, MRP=MRC rule, elasticity of resource demand, least-cost combination of resources, profit-maximizing combination of resourcesChapter 13: Wage rate, nominal wage, real wage, purely competitive labor market, monopsony, minimum wage, wage differentials, human capitalChapter 14: Economic rent, incentive function, time-value of money, nominal interest rate, real interest rate, Explicit costs, implicit costs, economic profit, normal profitChapter 16: Private goods, public goods, free-rider program, cost-benefit analysis, externalities, Coase Theorem, asymmetric information, moral hazard problem, adverse selection problemChapter 17: Public Choice Theory, logrolling, special-interest effect, benefits received principle, ability to pay principle, progressive tax, regressive tax, proportional tax, efficiency loss of a taxChapter 20: Lorenzo Curve, Gini ratio, equality efficiency trade offChapter 23: The business cycle; recession; real gross domestic product (GDP); nominal GDP; unemployment, financial investment, economic investment, demand shocks, supply shocks, sticky prices, inflation. Chapter 24: National income accounting; value added; expenditures approach (know parts- C, I, G & X); income approach (know parts), national income; personal income; disposable income; price indexChapter 25: Economic growth; real GDP per capita; labor productivity; infrastructure; human capitalChapter 26: Peak; trough; expansion, labor force; unemployment rate; three types (frictional, structural and cyclical) of unemployment, full rate of unemployment, natural rate of unemployment, Okun’s law; Consumer Price Index (CPI); Demand-pull v. cost-push inflation; deflation; nominal income, real income, cost-of-living adjustments, hyperinflationChapter 27: Consumption schedule, saving schedule, break even income, Average propensity to consume (save), Marginal propensity to consume (save), Wealth effect, Expected rate of return, MultiplierChapter 28: Planned investment, Investment schedule, Aggregate expenditures schedule, Equilibrium GDP, leakage, injection, net exports, recessionary expenditure gap, inflationary expenditure gapChapter 29: Aggregate demand-aggregate supply (AD-AS) model, Aggregate demand, Interest rate effect, Determinants of aggregate demand, Aggregate supply, Short-run aggregate supply curve, Determinants of aggregate supply, Productivity, Equilibrium price level, Equilibrium real outputChapter 30: Fiscal policy, Budget deficit/surplus, built-in (automatic) stabilizers, progressive tax system, crowding out effect, public debt, US securitiesChapter 31: Liquidity, M1, M2, commercial banks, Federal Reserve System, Federal Open Market CommissionChapter 32: Fractional reserves banking system, balance sheet, required reserves, reserve ratios, Federal funds rate, monetary multiplierChapter 33: Monetary policy, interest, transactions demand, asset demand, open market, discount rate, Federal Funds Rate, prime interest rate, Taylor RuleChapter 35: Phillips Curve; Stagflation; Aggregate supply shocks; Long-run vertical Phillips Curve, Supply-side economics; LafferCurveChapter 37: Comparative advantage (again), Terms of trade; Trading possibilities line,, gains from trade,world price, domestic price, export supply curve, tariffs (types), nontariff barrier, Dumping, World Trade Organization (WTO)Chapter 38: Balance of payments; Current account; Trade deficit; Trade surplus; Official reserves, Floating exchange rate system; Fixed-exchange-rate system; Purchasing power parity theory; Currency intervention; Exchange controlsMicroeconomic Outline (1stSemester)Unit 1: Basic Economic Concepts (Chapters 1, 2, 4&5, McConnell & Brue)Founding PrinciplesScarcity, the economizing problemTradeoffs and Opportunity CostFree-market system (Adam Smith’s invisible hand)Types of EconomicsMicroeconomics vs. macroeconomicsPositive economics vs. normative economicsProduction Possibilities GraphStraight vs. bowed PPFUnderutilization, full employment, and unattainableLaw of increasing opportunity cost3 shifters of the PPFConsumer goods vs. capital goodsCircular Flow ModelProduct market, Factor market, and Public/Private sectorSpecialization and TradeAbsolute advantageComparative advantageUnit 2: Supply, Demand, And Consumer Choice (Chapters 3, 6, & 7. McConnell & Brue)Demand (graph)Law of demandMarket demand curveDeterminants of demandNormal vs. inferior goodsSubstitutes and complementsSupply (graph)Law of supplyMarket supply curveDeterminants of supplyEquilibrium and Efficiency (graph)Equilibrium price and quantityDisequilibrium: surplus and shortages (graphing)Government Policies (graphs)Price floors and Price ceilingsExcise taxes, Subsidies, Tariffs, QuotasElasticityPrice, Income, and Cross Price elasticity of demandThe total revenue test (graph)Consumer ChoiceLaw of diminishing marginal utility, Substitution effect, Income effectMarginal benefit/costUtility maximizing ruleUnit 3 Costs of Production and Perfect Competition(Chapters 8&9.McConnell & Brue.)Economists vs. AccountantsTotal revenueExplicit and Implicit costs Economic costs and profitsCosts of Production (graph)Fixed Costs, Variable costs, and Total costsPer-unit costs (AVC, AFC, ATC)Shifts in MC, ATC. AVC, and AFCMarginal costs and Marginal revenueSunk costsLaw of Diminishing Marginal Returns (graph)Stage I: increasing returnsStage II: decreasing returnsStage III: negative returnsLong-run Production Costs (graph)Economies of scale, Constant Returns to scale, Diseconomies of scaleCharacteristics of Perfect CompetitionPrice takersDemand = MR= PriceGraph: Firm vs. industry (market)Short-run (profit or loss)Long-run equilibrium (New firm enter and exit)Normal profitShutdown decision (P< AVC)Productive efficiency (P = Min ATC)Allocative efficiency (P = MC)2nd QuarterUnit 4 Imperfect Competition(Chapters 10&11. McConnell & Brue)Characteristics of MonopoliesBarriers to entryMR below demand (graphs)Profit-maximizing price and quantityNatural monopolyEffects on overall economyCompared to competitive industryDead-weight lossX-efficiencyPrice discrimination (graph)Purpose and resultsGraph (MR=D)RegulationUnregulated price, Fair return price, and Socially optimal priceTaxes and subsidiesCharacteristics of Monopolistic CompetitionLong-run equilibrium (graph)Excess capacityNon-price competitionProduct differentiationCharacteristics of OligopoliesKinked demand curve-competitive pricingGame theory (chart) price leadershipCollusion and cartelsUnit 5 Resource Market(Chapters 12, 13& 14. McConnell & Brue)Demand for laborDerived demandMarginal revenue productMarginal resource costPerfectly competitive labor market (graph)Wage makersPerfectly elastic supply of laborMonopsony (graph)Wages and quantity compared to perfectly competitive labor marketLabor UnionsGoals and methodsEffects of Minimum WageWage differentialsInvestment in human capital vs. physical capitalG Rent, Interest and ProfitDistribution of IncomeCapital and InterestLoanable Funds marketUnit 6 Market Failures and Government Involvement(Chapters 16, 17& 20. McConnell & Brue)Public goodsDemand for public goodsSupply of public goodsFree-rider problemNon-excludability and Non-rivalryPositive externalities/spillover benefits (graph)Marginal social benefits vs. private benefitsUnderallocationGovernment remedyNegative externalities/spillover costs (graph)Marginal social cost vs. private costOverallocationGovernment remedyEconomics of Taxation (Tax Burden)Progressive tax systemsRegressive tax systemsProportional tax systemsIncome distributionLorenz curve (graph)Tax incidencesMacroeconomic Outline (2nd Semester)Third QuarterUnit 7: Macroeconomic Data and Measurement (Chapters 23 &24 McConnell& Brue)Introduction to MacroBasic ConceptsLong Run vs. Short RunDemand Shock vs. Supply Shock (Sticky Prices)GDP (Nominal and Real values)Expenditure approachIncome ApproachUnit 8: Inflation and Unemployment(Chapters 25 &26 )Economic GrowthRate of Economic GrowthReal GDPEconomic Growth and PPCLabor ProductivityBusiness CycleInflationCPIDemand- Pull and Cost PushUnemploymentTypes of unemploymentGDP Gap and Okun’s LawUnit 9: Consumptions vs. Savings(Chapters 27& 28)Average and marginal Propensities to Consume and SaveMPC and MPS as SlopesInterest RatesExpected Rate of ReturnReal Interest RatesMultiplier EffectChanges in Spending and changes in Real GDPInternational Trade and the Public SectorRecessionary Gap vs. Inflationary GapFourth QuarterUnit 10: Aggregate Demand and Aggregate Supply(Chapters 29 & 35) Aggregate DemandChanges in Aggregate DemandAggregate Demand CurveDeterminants of ADAggregate SupplyOutput in Immediate Short Run, Short Run and Long RunAggregate Supply CurveDeterminants of ASFiscal PolicyExpansionary vs. Contractionary Fiscal PolicyBuilt in StabilizersCrowding Out effectUnit 11: Money and Banking& Long Run AS (Chapter 30, 31, 32, 33& 35)MoneyM1M2BankingFederal Reserve SystemGlobalization of Financial marketsMoney Creation and Monetary PolicyReserve Requirement and Discount RateReserve RatioMonetary MultiplierInterest RatesTaylor Rule (Federal Funds Rate)Long Run Aggregate SupplyShort Run AS vs. Long Run ASLong Run EquilibriumDemand –Pull InflationPhillips Curve and StagflationSupply Side TheoryLaffer CurveApplication of Supply Side TheoryUnit 12: Exchange Rates/ Trade Deficit (Chapter 37 &38)International TradeKey facts and Basis for TradePPCComparative advantageGains from TradeFree Trade vs. Protectionist Theory (WTO)Balance of PaymentsFlexible Exchange RatesFixed Exchange RatesMacroeconomics Final Exam ................
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