• AP Macroeconomics Summer Assignment . (also available here as a pdf--AP Macroeconomics Summer Assignment )

    Over the summer you will be required to complete a summer assignment in order to prepare for the AP Macroeconomics course. The assignment is as follows:

    1. You will be required to read, Naked Economics: Undressing the Dismal Science, by Charles Wheelan. The book can be found at any local bookstore like Barnes & Noble or online at www.amazon.com

    1. You will have a 20 question quiz covering Naked Economics on the 1st day of school (20 points)

    2. Below is a study guide that is intended to help you in your reading.

    3. You will also be required to provide a 3-4 sentence explanation/definition for the 10 concepts below that are going to be fundamental to your understanding of AP Macroeconomics.

    Key Macro Concepts

    1. Aggregate Demand

    2. Aggregate Supply

    3. Fiscal Policy

    4. Monetary Policy

    5. Open Market Operations

    6. Money Market

    7. Loanable Funds Market

    8. Phillips Curve

    9. Unemployment (include the 4 types)

    10. Inflation

    “Naked Economics” Study Guide

    The following reflects the major areas of Naked Economics from which questions will be taken. This is not intended as shortcut around reading the entire book, but rather is meant to help you concentrate your final preparation for the Naked Econ exam.

    Chapter 1 - The Power of Markets

    Market allocation
    Assume rational utility-maximizers Opportunity costs
    Profit max
    Prices allocate resources
    Barriers to entry
    Market price, pricing decision & price

    discrimination Lessons of markets

    Chapter 2 - Incentives Matter

    Wrong incentives lead to undesirable outcomes

    Principal-agent problem
    Prisoner’s dilemma
    Creative destruction
    Tax and govt program disincentives

    Chapter 3 – Government and the Economy

    Government solutions to externalities Government makes market economy

    possible – rights, laws regulations Public goods


    Chapter 4 – Government & the Economy II

    Government inefficiency
    Government allocation vs. private allocation Effects of regulation
    Effects of taxation

    Chapter 5 – Economics of information

    Adverse selection
    Firm screening
    Branding provides information Branding versus commodities Signaling mechanisms

    Chapter 6 – Productivity and Human Capital
    Human capital
    Job creation

    Effects of human capital on standard of living Productivity
    Income inequality

    Chapter 7 – Financial Markets

    Purposes of financial instruments Efficient markets & index funds Investment guidelines

    Chapter 8 – The power of Organized Interests
    Interest groups & politicians’ incentives Some regulations benefit business Tyranny of the status quo

    Chapter 11 – Trade and Globalization

    Benefits of trade
    Comparative advantage & specialization Losers from trade
    Trade raises real income
    Trade benefits for poor countries Cultural homogenization