- Unit 1A: The Economizing Problem, International Trade and Finance
- Unit 1B: Supply & Demand
- Unit 2: Economic Indicators & the Businss Cycle
- Unit 3: National Income & Price Determination
- Unit 4: Financial Sector
- Unit 5: Long-Run Consequences of Stabilization Policies
- Unit 6: Open Economy: International Trade & Finance Revisted
Unit 1A: The Economizing Problem, International Trade & Finance
What better way to begin a study of Macroeconomics then to take a look at the basics? In this unit we will look at the important ideas of scarcity and opportunity costs. This is the introduction on how to think like an economist. In economics we will have to examine all choices from a cost - benefit perspective, "What is there to gain? What has to be given up? And is the cost too high?" To get a good look at this we will examine two important concepts, comparative advantage and trade. We will understand how opportunity costs are important to understand why we trade and why people benefit from trade.
I have chosen to include parts of Unit 6 Open Economy: International Trade and Finance in Unit 1A since it relates directly to Comparative Advantage. We will revisit this topic in more depth at the end of the course in Unit 6.
Unit Topics
| Topic | Krugman | OpenStax | |
|---|---|---|---|
| 1.1 | Scarcity | 2-4 | 1.1, 2.0, 2.1 |
| 1.2 | Opportunity Cost and the Production Possibilities Curve (PPC) | 4-5, 16-23 | 2.2 |
| 1.3 | Comparative Advantage and Gains from Trade | 24-31 | 2.2 |
| 6.1 | Balance of Payments Accounts | 406-416 | 9.0, 9.1, 9.2, 9.3 |
| 6.2 | Exchange Rates | 417-425 | 5.4, 15.0 |
| 6.3 | The Foreign Exchange Market | 417-425 | 15.1, 15.2 |
Topic 1.1: Scarcity
Topic 1.1 Handouts
Required Course Content
Suggested Skill(s): |
Principles and Models 1.A Describe economic concepts, principles, or models. |
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Slideshows
Slideshows are best if viewed in full screen.
Do You Think Like an Economist?
As an introduction to economics, test your thinking and get your mind ready for the economic way of thinking.
Handout: Do You Think Like an Economist?
Ten Principles of Economics
When it comes to thinking like an economist, these ten principles are the guiding ideas. The biggest change that will happen this semester is in how you will look at the world and how that view will make you a better decision maker. (Videos embedded in the PowerPoint below are not active. They can be viewed VIDEOS section below.)
Videos
Videos are best viewed full screen.
Mankiw's "10 Principles of Economics" Part 1
Although we are currently forgoing the use of Mankiw's textbook, his ideas on the basic principles of economics are still useful. He claims that there are 10 Basic Principles. This first segment focuses on How People Make Decisions.
Mankiw's "10 Principles of Economics" Part 2
Coninuing from the first segment, this second segment focuses on How People Interact.
Mankiw's "10 Principles of Economics" Part 3
Coninuing from the second segment, this third segment focuses on How the Economy Works as A Whole.
Economics Made Memorable: Trade-Offs and Opportunity Costs, part 1: Costs
This basic video introduces the concept of Opportunity Costs and illustrates, albeit, in a very mechanical way, that there are hidden costs to every decision beyond the obvious money costs.
Economics Made Memorable: Trade-Offs and Opportunity Costs, part 2: Benefits
The second part of this series demonstrates that benefits are sometimes difficult to determine thereby making it even more difficult to compare them to the costs.
1.1 Thinking Like An Economist
From the publisher, A NEW school year means NEW videos! I'm going to be making new videos covering every topic in your introductory college econ or AP econ course. This episode is about scarcity, guns and butter (trade-offs), the factors of production, and the difference between microeconomics and macroeconomics. What do you think?
Principles of Economics Translated, by the Standup Economist
Now that you spent 40 minutes viewing the 10 Principles of Economics, why not take 5 minutes to step back and laugh at them.
Topic 1.2: Opportunity Cost and the Production Possibilities Curve (PPC)
Topic 1.2 Handouts
Required Course Content
Suggested Skill(s): |
Principles and Models 4.A Draw an accurately labeled graph or visual to represent an economic model or market. |
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Online Textbook Resources
Unfortunately, due to the age of the textbook, the publisher has removed all online content associated with our textbook.While we will use the book as an important source, the links given therein are no loner functioning. As a result, I will look online for other sources related to the topics in our text. Likewise, I encourage you to let me know of any useful websites that you come across in your studies so that I may add them to the site and share with everyone.
Slideshows
Slideshows are best if viewed in full screen.
The 10 Principles of Economics
Circular Flow Model
Demand
Supply
Videos
Jacob Clifford's ACDC Economics
Among AP Econoics teachers, Jacob Clifford is the most discussed resource available. He has authored dozens of videos for Macroeconomics and Microeconomics. These videos are a great resource and supplement to the course material and can help prepare you for the exam, especially with regard to the FRQs. They are organized by topic within each Unit as created by the College Board. I suggest using them throughout the unit to help review or clarify concepts throughout. Many videos have practice questions at the end. To see the answers you will need to go over to YouTube to see them in the comments.
- 1.1 Thinking Like An Economist
From the publisher, A NEW school year means NEW videos! I'm going to be making new videos covering every topic in your introductory college econ or AP econ course. This episode is about scarcity, guns and butter (trade-offs), the factors of production, and the difference between microeconomics and macroeconomics. What do you think?
- 1.2 Production Possibilities Curve
From the publisher, In this video I explain how the production possibilities curve (PPC) shows scarcity, trade-offs, opportunity cost, and efficiency. This is the first graph you are going to learn in your economics class. Thanks for watching.
- 1.3 Comparative Advantage and Trade
From the publisher, This topic is somehow ridiculously simple and ridiculously complex. The simple part is understanding that trade is mutually beneficial. The complex part is calculating per unit opportunity cost and determining how individuals, business, or countries should specialize trade. Make sure to practice, practice, practice.
- Comparative Advantage Practice
From the publisher, If you want to skip the lesson and just practice go to 10:48. I spend the first have of the video explaining how to identify which country has an absolute advantage, calculate opportunity cost, identify which country has a comparative advantage, and find a terms of trade that both countries would voluntarily agree to. The second half of the video is an additional practice questions where I quickly go over the answers. I also added the answers below if you are in a hurry.
- 6.1 Balance of Payments (BOP) Accounts
From the publisher, In this video I explain the Balance of Payments with the current and capital (financial) account. Keep in mind that when a country has a deficit in one account they must have a surplus in the other account.
- 6.3 The Foreign Exchange Market
From the publisher, In this video I explain the market for foreign exchange and national currencies.
Video Link: Learner.org
Each episode is nearly 30 minutes and originally aired on PBS in the 1980s. This series investigates important economic concepts through historic events in American History. In the last 4-5 years, each episode has been updated with an additional, more current event that demonstrates the concept at hand.
- Economics U$A: #1 Markets
From the website, The return of U.S. troops from overseas following World War II created a massive demand for cheap housing. Rising labor and energy costs in the United States in the '60s and '70s forced domestic steel manufacturer NUCOR to find ways to lower production costs. In 2009, rookie pitcher phenomenon Stephen Strasburg signed the largest rookie contract in baseball history. These stories show how a well-functioning free market pricing system determines how producers manufacture goods, what they will pay, what goods will be manufactured, and for whom the goods will be produced.
If the video does not open, in the windown that opens, scroll down to the title "1. Markets" and click the "VoD" icon on the right.
- Economics U$A: #14 Resources and Scarcity
From the website, Faced with dwindling resources, Congress fiercely debated whether to preserve 100 million acres of Alaskan land as a national park, or open the land for mineral exploration. World War II saw an unprecedented period of economic growth. The need to mobilize resources overseas quickly was palpable. In the 1970s U.S. textile industries risked competitive advantage in increasingly active Asian markets by investing more in the health of their workers. In all investments there are trade-offs and choices. These stories show how the cost of using some resources sometimes comes at the expense of others.
If the video does not open, in the windown that opens, scroll down to the title "14. Resources and Scarcity" and click the "VoD" icon on the right.
Return to Mocha
This is a fun video from the 1980s (broken into three parts to fit on YouTube). This video illustrates the operations of the three basic economic systems: Command, Traditional, Market. On a deeper level, it also illustrates the concepts of absolute advantage and comparative advantage.