| Module (Chapter) |
Learning Outcomes |
| Economic Thinking: Prepare for success in studying economics |
- Explain what economics is and explain why it is important
- Explain how economists use economic models
- Use mathematics in common economic applications
- Use graphs in common economic applications
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| Choice in a World of Scarcity: Use economic thinking to explain choice in a world of scarcity |
- Explain the cost of choices and trade-offs
- Illustrate society’s trade-offs by using a production possibilities frontier (or curve)
- Explain the assumption of rationality by individuals and firms
- Define marginal analysis
- Differentiate between positive and normative statements
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| Supply and Demand: Analyze how buyers and sellers interact in a free and competitive market to determine prices and quantities of goods |
- Describe and differentiate between major economic systems
- Explain the determinants of demand
- Explain the determinants of supply
- Explain and graphically illustrate market equilibrium, surplus and shortage
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| Elasticity: Measure how changes in price and income affect the behavior of buyers and sellers |
- Explain the concept of elasticity
- Explain the price elasticity of demand and price elasticity of supply, and compute both using the midpoint method
- Explain and calculate other elasticities using common economic variables
- Explain the relationship between a firm’s price elasticity of demand and total revenue
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| Government Action: Evaluate the consequences of government policies in markets |
- Analyze the consequences of the government setting a binding price ceiling
- Analyze the consequences of the government setting a binding price floor
- Explain how the price elasticities of demand and supply affect the incidence of a sales tax
- Define progressive, proportional, and regressive taxes
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| Surplus: Use the concept of producer, consumer surplus, and total surplus to explain the outcomes of markets for individuals, firms, and society |
- Define and calculate consumer, producer and total surplus; graphically illustrate consumer, producer and total surplus
- Use the concepts of consumer, producer and total surplus to explain why markets typically lead to efficient outcomes
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| Macroeconomic Measures of Performance: GDP and Unemployment: Evaluate macro economic performance using indicators that include output measures and unemployment |
- Define the term “economic indicator;” identify the major economic indicators used to assess the state of the macroeconomy
- Explain the expenditure and national income approaches to calculating GDP
- Describe the relationships among GDP, net domestic product, national income, personal income, and disposable income
- Explain how the unemployment rate is calculated
- Critique the unemployment rate as a measure of the unemployment problem
- Identify and differentiate between the different types of unemployment
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| Macroeconomic Measures of Performance: Inflation and Price Indexes: Evaluate macro economic performance using indicators that include inflation |
- Define the rate of inflation; explain how the rate of inflation is calculated
- Explain the consequences of price instability (i.e., inflation)
- Explain the concept of a price index and explain how price indices are derived; define the consumer price index and the producer price index; calculate a price index number given a basket of goods & services and the nominal price of each in a base year and at some later time
- Use a price index to translate between real and nominal data
- Define the GDP price index (also known as the GDP deflator or the Implicit Price Deflator)
- Differentiate between nominal GDP and real GDP
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| Macro Workings: Model the macro economy over the short and long terms |
- Describe the business cycle and its primary phases
- Define economic growth
- Identify the sources of economic growth
- Explain productivity and relate productivity growth to improvements in the standard of living
- Use the AD-AS model to explain the equilibrium levels of real GDP and price level; define aggregate demand (AD) and explain the factors that cause it to change; define aggregate supply (AS) and explain the factors that cause it to change
- Use the AD-AS model to explain periods of growth, recession, and expansion, demand-pull inflation and cost-push inflation
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| Keynesian and Neoclassical Economics: Identify, compare, and apply key features of Neoclassical and Keynesian economic models |
- Understand the tenets of Keynesian Economics and apply the tenets through the aggregate demand and supply model; identify the Keynesian portion of the AS curve and explain the logic for it
- Use the Income-Expenditure model to explain periods of recession and expansion; find the GDP Gap (negative or positive)
- Use the Expenditure Output model to explain periods of recession and expansion
- Understand the tenets of Neoclassical Economics; identify the Neoclassical portion of the AS curve and explain the logic for it; differentiate between the long run and short run aggregate supply curves
- Compare and contrast the circumstances under which it makes sense to apply the Keynesian and Neoclassical perspectives
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| Fiscal Policy: Understand what government budgets consist of, and how fiscal policy affects the economy |
- Identify the major spending categories and major revenue sources in the U.S. Federal budget
- Identify the major spending categories and major revenue sources in U.S. state and local budgets
- Define fiscal policy, identifying the roles of tax rates and government spending
- Differentiate between discretionary and automatic fiscal policy; define Automatic Stabilization Tools; define discretionary fiscal policy; differentiate between structural and cyclical budget balance
- Compare and contrast expansionary and contractionary fiscal policies
- Compare and contrast the way tax changes and government spending changes work
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| Monetary Policy: Explain the role of money, banking and monetary policy in the economy |
- Define money; explain the functions of money; define liquidity
- Define credit (or debt)
- Explain what a bank does
- Understand how money is created by lending; calculate the lending capacity of a bank given its deposits and a required reserve ratio
- Explain the structure, functions and responsibilities of the Federal Reserve System; define the money multiplier, explain how to calculate it, and demonstrate its relevance
- Differentiate between M1 and M2 (measures of the supply of money)
- Define monetary policy and differentiate it from fiscal policy; identify the tools of monetary policy
- Define interest rates; differentiate between the Federal funds rate, the Prime rate and the Discount rate
- Explain how the equilibrium interest rate is determined in the market for money; describe what economists mean by the demand for money
- Explain the mechanism by which market operations affect the money supply and interest rates
- Explain how monetary policy affects GDP and the price level
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| Policy Application: Use an understanding of the strengths and weakness of fiscal and monetary policy to determine an appropriate stabilization policy for a given macroeconomic situation |
- Understand the Keynesian view on changes in government spending and taxation; define the multiplier effect; define the crowding out effect and explain why it occurs and how it reduces the fiscal multiplier; define the Keynesian concept of the Liquidity Trap and explain why it occurs and how it reduces the effectiveness of monetary policy
- Understand the effects of tax and spending policy from a neoclassical perspective; define and give examples of supply-side economics; explain the types of lag times that often occur when solving economic problems; describe the neoclassical long-run aggregate supply curve; understand and describe the emergence of New Classical Economics, along with its main tenets; define Ricardian Equivalence
- Identify appropriate macro policy options in response to the state of the economy; understand the effectiveness and limitations of fiscal and/or monetary policy for a given state of the economy; choose an appropriate fiscal and monetary policy for a given state of the economy
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| Globalization, Trade, and Finance: Analyze the benefits and costs of international trade |
- Define and calculate comparative and absolute advantage
- Explain how a nation’s workers and consumers are affected by impact of international trade
- Understand the way government regulations (e.g. tariffs, quotas and non-tariff barriers) affect business, consumers and workers in the economy
- Differentiate between alternative international trade regimes and how they impact global trade
- Define currency exchange rates and explain how they influence trade balances
- Explain how the balance of trade (surplus or deficit) affects the domestic economy, and how the domestic economy affects the balance of trade
- Connect globalization, international trade, and international finance
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