Curriculum Map: Macroeconomics Course: Macroeconomics Map: Macroeconomics Course: Macroeconomics (LRC) Grade: ... economic fluctuations and to recognize the ... What are the guideposts

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  • Curriculum Map: Macroeconomics Course: Macroeconomics (LRC) Grade: 12

    Course Description:

    Macroeconomics La Roche College AMG 1005 Students study basic economic concepts that include, but are not limited to, supply and demand; Gross Domestic Product (GDP); national income analysis, unemployment, inflation, macroeconomic theory, monetary policy and the Federal government, international trade and the role of the political process in economic life. This is a dual enrollment class in economics offered jointly by SJHS and La Roche College for three (3) undergraduate credits and a weighted SJHS grade. This class conforms to Advanced Placement standards.

    Course Textbooks, Workbooks, Materials Citations:

    1. Annenberg Media. Economics USA (Twenty-eight episodes on DVD) 2. Baumol, William and Alan S. Blinder. Macroeconomics:Principles and Policy. 11th

    Edition. Cengage Publishing 2011. 3. Morton, John. Advanced Placement Instructional Package: Macroeconomics

    Student Activities. Joint Council on Economic Education. 1998 4. Capstone: Exemplary Lessons for High School Economics Joint Council on

    Economic Education, 2009 5. Teaching the Financial Crisis Joint Council on Economic Education, 2010 6. Virtual Economics Joint Council on Economic Education, 2007 7. Focus: Understanding Economics in Civics and Government

    Curriculum Map Author(s):

    Rosanne Pucciarelli

    Unit: Unit 1 Basic Economic Concepts Timeline: 7 Weeks Unit Description:

    Students study and analyze the fundamental economic concepts such as scarcity and opportunity costs. They recognize the distinction between absolute and comparative advantage and apply the principle of comparative advantage to determine the basis on which mutually advantageous trade can take place between individuals and/or countries, and to identify comparative advantage from differences in opportunity costs. Students also explore the functions performed by an economic system and the way the tools of supply and demand are used to analyze the workings of a free market economy. Students define and describe the business cycle to better understand economic fluctuations and to recognize the dynamics of unemployment, inflation, and economic growth. Students develop a solid foundation for a thorough understanding

  • of macroeconomic concepts and issues.

    Unit Big Ideas:

    1.Limited resources and unlimited wants require choices by individuals, groups, and nations. 2.All economic systems must answer what, and how, goods and services will be produced, and who will consume those goods and services. 3.The interaction of buyers and sellers determines prices and quantities exchanged, except when influenced by governmental policies.

    Unit Essential Questions:

    1. What are the economic goals of any society? 2. How does a production possibilities model illustrate the economic problem of scarcity, choice, and cost? 3. What are the guideposts to economic thinking? 4. Why do people trade? 5. Why is equilibrium important in a market economy? 6. How do government price ceilings, supports, and taxation affect equilibrium price and quantity? 7. What is marginal utility and how does in determine what consumers will buy?

    Unit Key Terminology & Definitions :

    1. Elasticity: The relative response of one variable to changes in another variable. The phrase "relative response" is best interpreted as the percentage change. For example, the price elasticity of demand, one of the more important applications of this concept in economics, is the percentage change in quantity demanded measured against the percentage change in price. Other notable economic elasticities are the price elasticity of supply, income elasticity of demand, and cross elasticity of demand.

    2. Economic growth - An increase in the total output of a nation over time. Economic growth is usually measured as the annual rate of increase in a nation's real GDP.

    3. Full employment - A term that is used in many senses. Historically, it was taken to be that level of employment at which no (or minimal) involuntary unemployment exists. Today economists rely upon the concept of the natural rate of unemployment to indicate the highest sustainable level of employment over the long run.

    4. Capital - All buildings, equipment and human skills used to produce goods and services.

    5. Capital resources - Goods made by people and used to produce other goods and services. Examples include buildings, equipment, and machinery.

    6. Government - National, state and local agencies that use tax revenues to provide goods and services for their citizens.

    7. Gross domestic product (GDP) - The value, expressed in dollars, of all final goods and services produced in a year.

    8. Inflation - A sustained and continuous increase in the general price level.

    9. Real Gross domestic product (GDP), - GDP corrected for inflation. 10.Economic Goals: Five basic conditions of the economy that are

    generally desired by society. They are typically divided into macro goals (full employment, stability and growth) and micro goals (efficiency and equity).

  • 11.Production Possibility Curve (or Frontier) PPC -A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.). The PPC assumes that all inputs are used efficiently.

    12.Productive resources - All natural resources (land), human resources (labor), and human-made resources (capital) used in the production of goods and services.

    13.Specialization - The situation in which people produce a narrower range of goods and services than they consume.

    14.Standard of living - A minimum of necessities, comforts, or luxuries held essential to maintaining a person or group in customary or proper status or circumstances.

    15.Marginality- In economics marginality is the focus on how one thing changes if something else changes just slightly.

    16.Incentives - Factors that motivate and influence the behavior of households and businesses. Prices, profits, and losses act as incentives for participants to take action in a market economy.

    17.Ceteris Paribus: A Latin term meaning that all other factors are held unchanged. The ceteris paribus assumption is used to isolate the effect one economic factor has on another. Without this assumption, it would be difficult to determine cause and effect in the economy. Relaxing the ceteris paribus assumption is the primary analytical technique used in the study of economics, especially when analyzing the market. Much like a chemist adds one chemical at a time to a mixture to determine the resulting reaction, an economist relaxes one ceteris paribus assumption at a time to observe the results.

    18.Production function: A mathematical way to describe the relationship between the quantity of inputs used by a firm and the quantity of OUTPUT it produces with them. If the amount of inputs needed to produce one more unit of output is less than was needed to produce the last unit of output, then the firm is enjoying increasing RETURNS to scale (or increasing MARGINAL product). If each extra unit of output requires a growing amount of inputs to produce it, the firm faces diminishing returns to scale (diminishing marginal product).

    19.Absolute advantage: This is the simplest yardstick of economic performance. If one person, firm or country can produce more of something with the same amount of effort and resources, they have an absolute advantage over other producers. Being the best at something does not mean that doing that thing is the best way to use your scarce economic resources. The question of what to specialise in--and how to maximise the benefits from international trade--is best decided according to comparative advantage. Both absolute and comparative advantage may change significantly over time.

    20.Comparative advantage: Paul Samuelson, one of the 20th century's greatest economists, once remarked that the principle of comparative advantage was the only big idea that ECONOMICS had produced that was both true and surprising. It is also one of the oldest theories in economics, usually ascribed to DAVID RICARDO. The theory underpins the economic case for FREE TRADE. But it is often misunderstood or misrepresented by opponents of free trade. It shows how countries can gain from trading with each other even if one of them is more efficient -

  • it has an ABSOLUTE ADVANTAGE - in every sort of economic activity. Comparative advantage is about identifying which activities a country (or firm or individual) is most efficient at doing.To see how this theory works imagine two countries, Alpha and Omega. Each country has 1,000 workers and can make two goods, computers and cars. Alpha's economy is far more productive than Omega's. To make a car, Alpha needs two workers, compared with Omega's four. To make a computer, Alpha uses 10 workers, compared with Omega's 100. If there is no trade, and in each country half the workers are in each industry, Alpha produces 250 cars and 50 computers and Omega produces 125 cars and 5 computers.What if the two countries specialise? Although Alpha makes both cars and computers more efficiently than Omega (it has an absolute advantage), it has a bigger edge in computer making. So it now devotes most of its resources to that industry, employing 700 workers to make computers and only 300 to make cars. This raises computer output to 70 and cuts car production to 150. Omega switches entirely to cars, turning out 250.World output of both goods has risen. Both countries can consume more of both if they trade, but at what PRICE? Neither will want to import what it could make more cheaply at home. So Alpha will want at least