| MACRO: Unit 2, Topic 2.5: Costs of Inflation (1 class period) |
| MACRO: Unit 2, Topic 2.4: Price Indices and Inflation (1 and 1/2 class periods) |
| MACRO: Unit 2, Topic 2.6: Real vs. Nominal GDP (1 class period) |
| MACRO: Unit 2, Topic 2.7: Business Cycle (1 class period) |
| Fireside Chat 2 Activities Topic 2.5 |
| Fireside Chat 2 Activities Topic 2.7: Business Cycle (5 minutes) |
| *ENDURING UNDERSTANDING An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. *LEARNING OBJECTIVE Explain the costs that unexpected inflation (deflation) imposes on individuals and the economy. *ESSENTIAL KNOWLEDGE Unexpected inflation arbitrarily redistributes wealth from one group of individuals to another group, such as lenders to borrowers. |
| Fireside Chat 2 Activities Topic 2.3 Unemployment (10 minutes) |
| *ENDURING UNDERSTANDING An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. *LEARNING OBJECTIVE a. Define the consumer price index (CPI), inflation, deflation, disinflation, the inflation rate, and real variables. b. Explain how price indices can be used to calculate the inflation rate and to compare nominal variables over time periods. c. Calculate the CPI, the inflation rate, and changes in real variables. Define the shortcomings of the CPI as a true measure of inflation. *ESSENTIAL KNOWLEDGE The consumer price index (CPI) measures the change in income a consumer would need in order to maintain the same standard of living over time under a new set of prices as under the original set of prices. The CPI measures the cost of a fixed basket of goods and services in a given year relative to the base year. X Exclusion: Calculating the producer price index (PPI) is beyond the scope of the course and AP Exam. The inflation rate is determined by calculating the percentage change in a price index, such as CPI or the GDP deflator. Real variables, such as real wages, are the nominal variables deflated by the price level. The CPI as a measure of inflation has some shortcomings, such as substitution bias, causing it to overstate the true inflation rate. |
| *ENDURING UNDERSTANDING An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. *LEARNING OBJECTIVE Define nominal GDP and real GDP. Calculate real GDP and the GDP deflator. *ESSENTIAL KNOWLEDGE Nominal GDP is a measure of how much is spent on output. Real GDP is a measure of how much is produced. Nominal GDP measures aggregate output using current prices. Real GDP measures aggregate output using constant prices, thus removing the effect of changes in the overall price level. One way of measuring real GDP is to weigh final goods and services by their prices in a base year. Because this can lead to overstatement of real GDP growth, statistical agencies actually use different methods. Nominal GDP can be converted to real GDP by using the GDP deflator. |
| *ENDURING UNDERSTANDING The economy fluctuates between periods of expansion and contraction in the short run, but economic growth can occur in the long run. *LEARNING OBJECTIVE a. Define (using graphs and data as appropriate) turning points and phases of the business cycle. b. Explain (using graphs and data as appropriate) turning points and phases of the business cycle. *ESSENTIAL KNOWLEDGE Business cycles are fluctuations in aggregate output and employment because of changes in aggregate supply and/or aggregate demand. The phases of a business cycle are recession and expansion. The turning points of a business cycle are peak and trough. The difference between actual output and potential output is the output gap. Potential output is also called full-employment output. It is the level of GDP where unemployment is equal to the natural rate of unemployment. |
| Joel Miller FEE.org Curriculum Development Officer Taught AP® Economics at Forsyth County Schools, Georgia for 14 years John Morton Award for Excellence in Economic Instruction, 2020 AP® Economics Reader |
| FEE.org Presents |
| Fireside Chat 2 |
CED Requirement on Demand Pull and Cost Push Inflation
| Steven M. Reff Economics Lecturer University of Arizona (2007 - 2016) AP® Economics Test Development Committee Member AP® Reader and Table Leader |
| Matt Pedlow Chelsea High School, Michigan Economics Educator for 16 years. John Morton Award for Excellence in Economic Instruction, 2018 AP® Daily Video Instructor, Reader, and Table Leader |
Instructors
CED Requirement for The Business Cycle
| (Foundation for Economics Education) |
Current Event -- Business Cycle (Pre-Pandemic Economy to September 2021 Economy )
| "Saving You Time by Teaching Online." |
Current Event -- Measurements of Inflation (2021)
Agenda for this evening (Unit 2: Macroeconomics) -- Business Cycle and Economic
Indicators:
reffonomics.com/firesidechat2abc.html
*Joel Miller's Introduction (2 minutes)
*Circular Flow Activity (5 minutes)
*Limitations to GDP (5 minutes)
*Unemployment (10 minute)
*Price Indices and Inflation (10 minutes)
*Business Cycle (10 minutes)
*Real vs. Nominal and the Cost of Inflation (10 minutes)
*Business Cycle (5 Minutes)
*Joel Miller's Post-Event Wrap Up (3 minutes)
Indicators:
reffonomics.com/firesidechat2abc.html
*Joel Miller's Introduction (2 minutes)
*Circular Flow Activity (5 minutes)
*Limitations to GDP (5 minutes)
*Unemployment (10 minute)
*Price Indices and Inflation (10 minutes)
*Business Cycle (10 minutes)
*Real vs. Nominal and the Cost of Inflation (10 minutes)
*Business Cycle (5 Minutes)
*Joel Miller's Post-Event Wrap Up (3 minutes)
AP® is a trademark registered and owned by the College Board, which is not affiliated with,
and does not endorse, this website, reffonomics.com or FEE.org
and does not endorse, this website, reffonomics.com or FEE.org
Current Event -- Inflation, Disinflation, and Deflation (2021)
Link to: fee.org/learning-center
Economic Indicators Multiple Choice Exam Questions (Macroeconomic Measurements) 27 Questions
Starting with the July, 2021 report: An Update to the Budget and Economic Outlook: 2021 to 2031, this series
was renamed from "Natural Rate of Unemployment (Long-Term)" to "Noncyclical Rate of Unemployment".
was renamed from "Natural Rate of Unemployment (Long-Term)" to "Noncyclical Rate of Unemployment".
| MACRO: Unit 2, Topic 2.1: Circular Flow Activity (1 class periods) |
CED Requirement on Who Benefits and Who is Hurt by Inflation:
| MACRO: Unit 2, Topic 2.3: Unemployment (2 class periods) |
| MACRO: Unit 2, Topic 2.2: Limitations of GDP (1 class period) |
| *ENDURING UNDERSTANDING Economic Performance An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. LEARNING OBJECTIVE Define the limitations of GDP. ESSENTIAL KNOWLEDGE GDP is a useful indicator of a nation’s economic performance, but it has some limitations, such as failing to account for nonmarket transactions. |
| MACRO -- Unit 2: Economics Indicators |
| Fireside Chat 2 Activities Topic 2.1 (5 Minutes) |
| Unit 2: Economics Indicators and the Business Cycle 9 - 11 class periods 12 - 17% of the Exam |
| ENDURING UNDERSTANDING An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. LEARNING OBJECTIVE a. Define (using the circular flow diagram as appropriate) how GDP is measured and its components. b. Calculate nominal GDP. ESSENTIAL KNOWLEDGE GDP is a measure of final output of the economy. GDP as a total flow of income and expenditure can be represented by the circular flow diagram. There are three ways of measuring GDP: the expenditures approach, the income approach, and the value-added approach. (Nothing is mentioned in the CED about calculating these approaches.) |
The below Enduring Understanding, Learning Objectives, and Essential Knowledge are from
the AP Macroeconomics Course and Exam Description, Effective Fall 2020 (collegeboard.org).
*AP® and Advanced Placement are registered trademarks of The College Board® which is not
affiliated with online.reffonomics.com, FEE.org, nor does it endorse this Principles of
Macroeconomics Course Curriculum.
the AP Macroeconomics Course and Exam Description, Effective Fall 2020 (collegeboard.org).
*AP® and Advanced Placement are registered trademarks of The College Board® which is not
affiliated with online.reffonomics.com, FEE.org, nor does it endorse this Principles of
Macroeconomics Course Curriculum.
| *ENDURING UNDERSTANDING An economy’s performance can be measured by different indicators such as gross domestic product (GDP), the inflation rate, and the unemployment rate. a. Define the labor force, the unemployment rate, and the labor force participation rate. b. Explain how changes in employment and the labor market affect the unemployment rate and the labor force participation rate. c. Calculate the unemployment rate and the labor force participation rate. d. Define the limitations of the unemployment rate. e. Define the types of and the natural rate of unemployment. f. Explain changes in the types of unemployment. *ESSENTIAL KNOWLEDGE The unemployment rate is the percentage of the labor force that is out of work. The labor force participation rate is another measure of the labor market activity in an economy. The labor force participation rate is the percentage of the adult population that is in the labor force. The measured unemployment rate is often criticized for understating the level of joblessness because it excludes groups such as discouraged workers and part-time workers. Economists primarily focus on three types of unemployment: cyclical, frictional, and structural. The natural rate of unemployment is the unemployment rate that would exist when the economy produces full-employment real output. It is equal to the sum of frictional and structural unemployment. The deviation of the actual unemployment rate from the natural rate is cyclical unemployment. The natural rate of unemployment can gradually change over time because of such things as changes in labor force characteristics. |
Current Event: Full Employment CURRENT EVENT ACTIVITY
CED Requirement on the CED: Circular Flow Interactive Activity
CED EASY FORMULAS for Unit 2:
| Fireside Chat 2 Activities Topic 2.2 Limitations of GDP (5 minutes) |
1) Items created at home, but not sold in the market. 2) Illegal Transactions 3) Sales of Stocks and Bonds
4) Sale of Used Goods 5) Value of Leisure 6) Social Well Being 7) Social Cost (i.e. pollution)
4) Sale of Used Goods 5) Value of Leisure 6) Social Well Being 7) Social Cost (i.e. pollution)
CED Requirement on what is NOT Included in GDP Squirt Gun Activity
| Fireside Chat 2 Activities Topic 2.4: Price Indices and Inflation (10 minutes) |
CED FRQ* on what is NOT Included in GDP
CED Requirement Different Types of Unemployment Interactive Activity:
CED Requirement on CPI and Types of Inflation #2
CED Requirement on Definitions and Formulas for EMPLOYMENT AND UNEMPLOYMENT #2:
CED Requirement on Formulas for Nominal vs. Real GDP #2:
CED Requirement on Definitions and Formulas for NATURAL RATE OF UNEMPLOYMENT:
| Fireside Chat 2 Activities Topic 2.6: Real vs. Nominal (10 minutes) |
How many recessions have we had in this 21st Century?
How many periods of time have there been in the U.S. with at least two consecutive quarters of deflation in this
21st Century?
21st Century?
CED Requirement on the CED: Define how GDP is measured and its components
| Fireside Chat 2 Activities Topic 2.5: Costs of Inflation (5 minutes) |
Joel Miller and Matt Pedlow's Questions (Employment, Unemployment, Inflation, GDP, Nominal vs. Real)
The Consumer Price Index (CPI) is the
"headline"-used term to determine the
inflation rate. The Federal Government
(fiscal policy) uses this number when
calculating the cost of living allowance
(COLA) increase in Social Security
beneficiary payments and other
federal programs.
The Personal Consumption Expenditure
Index (PCE Price index) is the Federal
Reserve’s preferred measure of
inflation.
The PCE Price Index is similar to the
Bureau of Labor Statistics' consumer
price index for urban consumers.
The two indexes, which have their own
purposes and uses, are constructed
differently, resulting in different
inflation rates.
"headline"-used term to determine the
inflation rate. The Federal Government
(fiscal policy) uses this number when
calculating the cost of living allowance
(COLA) increase in Social Security
beneficiary payments and other
federal programs.
The Personal Consumption Expenditure
Index (PCE Price index) is the Federal
Reserve’s preferred measure of
inflation.
The PCE Price Index is similar to the
Bureau of Labor Statistics' consumer
price index for urban consumers.
The two indexes, which have their own
purposes and uses, are constructed
differently, resulting in different
inflation rates.
Define the Limitations of GDP:
| Joel Miller's Post-Event Wrap Up (3 minutes) |
| Joel Miller FEE.org Curriculum Development Officer Taught AP® Economics at Forsyth County Schools, Georgia for 14 years John Morton Award for Excellence in Economic Instruction, 2020 AP® Economics Reader |
Link to: fee.org/learning-center
Reffonomics Baseball Economic Indicators and the Business Cycle
Current Event -- Business Cycle (Calculating a Recession 2021)
CED Requirement on Definitions and Formulas for EMPLOYMENT AND UNEMPLOYMENT #1:
CED Requirement on CPI and Types of Inflation #1
CED Requirement on Formulas for Nominal vs. Real GDP #1: