Page 25 - Krugmans Economics for AP Text Book_Neat

Modules 12 and 13 teach students how to define, measure, research and development, and technology lead to differ-
and categorize the types of unemployment. The definition ences in long-run economic growth and how growth policy
and measurement of inflation, price indices (real versus can be used to facilitate economic growth in the long run.
nominal values), and the costs of inflation are presented in Finally, Module 40 reviews and highlights how economic
Modules 14 and 15. growth plays a role in the macroeconomic models devel-
oped in earlier sections.
Section 4: National Income and Price Determination
Section 4 introduces national income and price determi- Section 8: Open Economy: International Trade and
nation and presents the aggregate supply and demand Finance
model, which is the foundation for the material presented Section 8 adds the international sector to the macreconom-
in later sections. Modules 16, 17, 18, and 19 introduce ic models presented in previous sections. Module 41 intro-
individual parts for the model; income and expenditures, duces balance of payments accounts. Modules 42 and 43
aggregate demand, aggregate supply, and equilibrium in develop the foreign exchange market and exchange rate
the model. Macreoconomics equilibrium and economics policy. Module 44 links the foreign exchange market to
fluctuations (including fiscal policy and the multiplier) financial markets and the markets for goods and services
are presented in Modules 20 and 21. through a discussion of exchange rates and macroeconom-
ic policy.
Section 5: Financial Sector Module 45 Module 45 shows students how the models
they have studied throughout the course can be applied to
In Section 5, money, banks, and the Federal Reserve are
answer real-world questions, like the type they will see on
added to our model of the macroeconomy. Modules 22,
the AP exam.
23, and 24 present basic concepts and their definitions;
saving, investment, financial assets, money, the money
supply, and the time value of money. Module 25 intro- Microeconomics
duces banking and the creation of money in the economy. Section 9 begins coverage of the material exclusive to the
Central banks and the Federal Reserve System are includ- AP Microeconomics Topic Outline. The first section of the
ed in Modules 26 and 27. Finally, the money market and AP Microeconomics Topic Outline, “Nature and Function
monetary policy, including the loanable funds market, are of Product Markets,” is quite large, representing 55–75% of
presented in Modules 28 and 29. the course material. We break this material into five sec-
tions: 2, 9, 10, 11, and 12.
Section 6: Inflation, Unemployment and
Stabilization Policies Section 9: Behind the Demand Curve:
Section 6 continues with coverage of monetary and fiscal Consumer Choice
policies. Module 30 focuses on fiscal policy and the impli- This section looks more closely at topics related to the
cations of government deficits and debt. Module 31 focus- demand curve. Module 46 explains how the income and
es on monetary policy and its effect on the interest rate. substitution effects relate to a downward sloping demand
Modules 32 and 33 look in detail at the types of inflation, curve and presents the concept of elasticity. Module 47 is
disinflation, and deflation, while Module 34 introduces devoted to developing price elasticity while Module 48
both the short-run and long-run Phillips curve. Finally, explains three additional elasticity measures important in
Modules 35 and 36 present some history of macroeconom- economics. Consumer and producer surplus are presented
ic thought as it leads to the modern macroeconomic con- in Modules 49 and 50 and are used to explain deadweight
sensus, emphasizing the role of expectations in loss. Finally, Module 51 presents consumer theory and util-
macroeconomic policy. ity maximization.

Section 7: Economic Growth and Productivity Section 10: Behind the Supply Curve: Profit,
Economic growth and the role of productivity are the Production, and Costs
focus in Section 7. Module 37 defines and discusses long- Section 10 shifts to a more detailed discussion of the sup-
run economic growth and Module 38 emphasizes the role ply curve. This section introduces the production and
of productivity in generating economic growth. Module 39 cost concepts used throughout the following sections.
looks at how differences in human and physical capital, The section begins with a discussion of profit and profit

PREFACE xxiii