Advanced Placement Macroeconomics

This article is part of the Advanced Placement  series.

General exam structure    •    Awards

Current Subjects:

Art History Biology Calculus (AB & BC) Chemistry Chinese Language and Culture Comparative Government & Politics Computer Science A English Language & Composition English Literature & Composition Environmental Science European History French Language German Language Human Geography Italian Language and Culture Japanese Language and Culture Latin: Vergil Macroeconomics Microeconomics Music Theory Physics B Physics C: Mechanics Physics C: Electricity and Magnetism Psychology Russian Language and Culture Spanish Language Spanish Literature Statistics Studio Art (2-D, 3-D, & Drawing) U.S. History U.S. Government & Politics World History

Former Subjects:

Computer Science AB French Literature Latin Literature

Advanced Placement Macroeconomics (also known as AP Macroeconomics, AP Macro, or simply Macro) is a course offered by the College Board as part of the Advanced Placement Program for high school students interested in college-level work in economics. Study begins with fundamental economic concepts such as scarcity, opportunity costs, production possibilities, specialization, comparative advantage, demand, supply, and price determination. Major topics include measurement of economic performance, national income and price determination, fiscal and monetary policy, and international economics and growth. AP Macroeconomics is frequently taught in conjunction with (and in some cases in the same year as) AP Microeconomics. It is equivalent to the introductory course of macroeconomics in college undergraduate level.

Contents 1 Topic outline 1.1 I. Basic Economic Concepts (8%-12%) 1.2 II.Measurement of Economic Performance (12%-16%) 1.3 III. National Income and Price Determination (10%-15%) 1.4 IV. Financial Sector (15%-20%) 1.5 V. Inflation, Unemployment, and Stabilization Policies (20%-30%) 1.6 VI. Economic Growth and Productivity (5%-10%) 1.7 VII. Open Economy: International Trade and Finance (10%-15%) 2 The exam 3 Grade distribution 4 Criticism 5 External links

Topic outline

I. Basic Economic Concepts (8%-12%)

A. Scarcity, choice, and opportunity costs

B. Production possibilities curve

C. Comparative advantage, absolute advantage, specialization, and exchange

D. Demand, supply, and market equilibrium

E. Macroeconomic issues: business cycle, unemployment, inflation, growth

II.Measurement of Economic Performance (12%-16%)

A. National income accounts

1. Circular flow
2. Gross domestic product
3. Components of gross domestic product
4. Real versus nominal gross domestic product

B. Inflation measurement and adjustment

1. Price indices
2. Nominal and real values
3. Costs of inflation

C. Unemployment

1. Definition and measurement
2. Types of unemployment
3. Natural rate of unemployment

III. National Income and Price Determination (10%-15%)

A. Aggregate demand

1. Determinants of aggregate demand
2. Multiplier and crowding-out effects

B. Aggregate Supply

1. Short-run and long-run analyses
2. Sticky versus flexible wages and prices
3. Determinants of aggregate supply

C. Macroeconomic Equilibrium

1. Real output and price level
2. Short and long run
3. Actual versus full-employment output
4. Economic fluctuations

IV. Financial Sector (15%-20%)

A. Money, banking, and financial markets

1. Definition of financial assets: money, stocks, bonds
2. Time value of money (present and future value)
3. Measures of money supply
4. Banks and creation of money
5. Money demand
6. Money market
7. Loanable funds market

B. 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%)

A. Fiscal and monetary policies

1. Demand-side effects
2. Supply-side effects
3. Policy mix
4. Government deficits and debt

B. Inflation and unemployment

1. Types of inflation
2. Demand-pull inflation
3. Cost-push inflation
4. The Phillips curve: short run versus long run
5. Role of expectations

VI. Economic Growth and Productivity (5%-10%)

A. Investment in human capital
B. Investment in physical capital
C. Research and development, and technological progress
D. Growth policy

VII. Open Economy: International Trade and Finance (10%-15%)

A. Balance of payments accounts

1. Balance of trade
2. Current account
3. Capital account

B. Foreign exchange market

1. Demand for and supply of foreign exchange
2. Exchange rate determination
3. Currency appreciation and depreciation

C. Net exports and capital flows

D. Links to financial and goods markets

The exam

• Section I: Multiple Choice [70 minutes - worth 2/3 of the exam grade]
• Section II: Free-Response [60 minutes - worth 1/3 of the exam grade]

Section I consists of 60 questions. Be advised that the multiple-choice portion of the exam is constructed to reflect the weighting of topics on the AP Macroeconiomcs Topic Outline (above). For example, test-takers should expect to find between 3 and 6 questions of the 60 total questions on the multiple choice section pertaining to "economic growth" because Unit VI. Economic Growth and Productivity should comprise 5%-10% of the course material studied.

Grade distribution

In the 2010 administration, 83,146 students took the exam.^[1] The mean score was a 2.82.

The grade distribution for 2010 was:

Score	Percent
5	14.4%
4	25.6%
3	15.2%
2	16.6%
1	28.1%

Criticism

Tawni Ferrarini, James Gwartney, and John Morton have argued that the examination does not adequately cover recent advances in the field, writing that "[t]he AP macroeconomics exam and resources largely reflect the simplistic Keynesian view from the 1960s and 1970s."^[2]

External links

1. ^ http://apcentral.collegeboard.com/apc/public/repository/2010_Macroeconomics_Score_Dist.pdf
2. ^ Tawni H. Ferrarini, James D. Gwartney, and John S. Morton, "Advanced Placement Economics: The Good, the Bad, and the Ugly," Econ Journal Watch 8(1) (January 2011), 67. [1]

• AP:Macroeconomics