Advanced Placement Macroeconomics

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.

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

Circular flow
Gross domestic product
Components of gross domestic product
Real versus nominal gross domestic product

B. Inflation measurement and adjustment

Price indices
Nominal and real values
Costs of inflation

C. Unemployment

Definition and measurement
Types of unemployment
Natural rate of unemployment

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

Determinants of aggregate demand
Multiplier and crowding-out effects

B. Aggregate Supply

Short-run and long-run analyses
Sticky versus flexible wages and prices
Determinants of aggregate supply

C. Macroeconomic Equilibrium

Real output and price level
Short and long run
Actual versus full-employment output
Economic fluctuations

IV. Financial Sector (15%-20%)
A. Money, banking, and financial markets

Definition of financial assets: money, stocks, bonds
Time value of money (present and future value)
Measures of money supply
Banks and creation of money
Money demand
Money market
Loanable funds market

B. Central bank and control of the money supply

Tools of central bank policy
Quantity theory of money
Real versus nominal interest rates

V. Inflation, Unemployment, and Stabilization Policies (20%-30%)
A. Fiscal and monetary policies

Demand-side effects
Supply-side effects
Policy mix
Government deficits and debt

B. Inflation and unemployment

Types of inflation
Demand-pull inflation
Cost-push inflation
The Phillips curve: short run versus long run
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

Balance of trade
Current account
Capital account

B. Foreign exchange market

Demand for and supply of foreign exchange
Exchange rate determination
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. The mean score was a 2.82.

The grade distribution for 2010 was: