Correlations

Foundations of Economics, AP* Edition ©2007

Robin Bade and Michael Parkin

Macroeconomics

Correlated to AP* Macroeconomics Course Outline 2007–2008

I. Basic Economic Concept

A. Scarcity, choice, and opportunity costs	1.1, 1.2
B. Production possibilities curve	3.1
C. Comparative advantage, specialization, and exchange	3.5, 34.2
D. Demand, supply, and market equilibrium	4.1, 4.2, 4.3
E. Macroeconomic issues: business cycle, unemployment, inflation, growth	Chapters 20, 21, 22

II. Measurement of Economic Performance

A. National income accounts
1. Circular flow	2.2, 20.1
2. Gross domestic product	20.1, 20.2
3. Components of gross domestic product	20.1
4. Real versus nominal gross domestic product	20.3
B. Inflation measurement and adjustment
1. Price indices	22.1, 22.2
2. Nominal and real values	22.3
3. Costs of inflation	28.3
C. Unemployment
1. Definition and measurement	21.1
2. Types of unemployment	21.3
3. Natural rate of unemployment	21.3, 23.1, 23.2

III. National Income and Price Determination

A. Aggregate demand
1. Determinants of aggregate demand	29.3, 30.1, 30.2, 30.3, 30.4
2. Multiplier and crowding-out effects	24.3, 30.3
B. Aggregate supply
1. Short-run and long-run analyses	23.1, 30.1, 30.2, 32.1, 32.2
2. Sticky versus flexible wages and prices	32.1, 32.2
3. Determinants of aggregate supply	29.2
C. Macroeconomic equilibrium
1. Real output and price level	29.4
2. Short and long run	32.1, 32.2
3. Actual versus full-employment output	21.3, 23.1, 29.4
4. Economic fluctuations	29.4

IV. Financial Sector

A. Money, banking, and financial markets
1. Definition of financial assets: money, stocks, bonds	24.1, 26.1
2. Time value of money (present and future value)	24.2, Chapter 24 Appendix
3. Measures of money supply	26.1
4. Banks and creation of money	27.1, 27.2
5. Money demand	28.1
6. Money market	28.2
7. Loanable funds market	24.2
B. Central bank and control of the money supply
1. Tools of central bank policy	26.3
2. Quantity theory of money	28.2
3. Real versus nominal interest rates	22.3, 28.1, 28.2

V. Inflation, Unemployment, and Stabilization Policies

A. Fiscal and monetary policies
1. Demand-side effects	31.1, 31.2, 33.2
2. Supply-side effects	31.1, 33.2
3. Policy mix	31.1, 31.2
4. Government deficits and debt	24.3, 31.1
B. Inflation and unemployment
1. Types of inflation
—a. Demand-pull inflation	The AP* Test Prep Workbook
—b. Cost-push inflation	The AP* Test Prep Workbook
2. The Phillips curve: short-run versus long-run	32.1, 32.2
3. Role of expectations	32.2, 32.3

VI. Economic Growth and Productivity

A. Investment in human capital	24.1
B. Investment in physical capital	24.1, 25.2
C. Research and development, and technological progress	Chapter 25
D. Growth Policy	24.3, 25.1, 25.2, 25.4

VII. Open Economy: International Trade and Finance

A. Balance of payments accounts
1. Balance of trade	35.1
2. Current account	35.1
3. Capital account	35.1
B. Foreign exchange market
1. Demand for and supply of foreign exchange	35.2
2. Exchange rate determination	35.2
3. Currency appreciation and depreciation	35.2
C. Net exports and capital flows	35.2
D. Links to financial and goods markets	35.2