AP Macroeconomics

Updated on Oct 25, 2023

Edit

Comment

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 coursework in macroeconomics. 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, although more students take the former.

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

Measurement of Economic Performance (12–16%)

A. National income accounts

B. Inflation measurement and adjustment

C. Unemployment

National Income and Price Determination (10–15%)

A. Aggregate demand

B. Aggregate supply

C. Macroeconomic Equilibrium

Financial Sector (15–20%)

Financial sector:

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

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

Economic Growth and Productivity (5–10%)

Economic Growth and Productivity:

A. Investment in human capital

B. Investment in physical capital

C. Research and development, and technological progress

D. Growth policy

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. The multiple-choice portion of the exam is constructed to reflect the weighting of topics on the AP Macroeconomics 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

The grade distribution for 2008–2015 were as follows:

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."