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ACE Principles of Economics (3 Semester Credits) - Course Syllabus


Principles of Economics covers the scope and sequence of requirements for an introductory economics course. This course takes a balanced approach to micro-and macroeconomics, to both Keynesian and classical views, and to the theory and application of economics concepts. The course also includes many current examples, designed to help students better grasp the basics of economic principles.  

Textbook: Principles of Economics – Open Stax – Greenlaw, et al., ISBN-10: 1-947172-37-9,  (This text is provided to students as part of their enrollment.)

Prerequisites: No prerequisites

Course objectives:

Throughout the course, you will meet the following goals:

  • Explain the theory and application of basic economic concepts.
  • Analyze the differences and relationship between micro- and macroeconomics.
  • Apply different economic perspectives to real-world situations.
  • Explore the effects of monetary policy both domestically and internationally.

Course Evaluation Criteria

A passing percentage is 70% or higher.

Grading Scale                                                                                   

  • = 95-100%
  • = 88-94.9%
  • = 80-87.9%
  • = 70-79.9%

F = below 70%

ACE Course Retake Policy

2 (two) attempts are allowed on every quiz, and 2 (two) attempts are allowed on every final exam.

Proctorio – Video Proctoring

All Final Exams are video proctored with Proctorio. (

ADA Policy

Excel Education Systems is committed to maintaining an inclusive and accessible environment to all students, across all of its schools, in accordance with the 1990 Federal Americans with Disabilities Act (ADA).

There is a total of 565 points in this course:

Grade Weighting

Chapter Quizzes          70%

Final Exam                    30%


Assessment Points Available Percentage of Final Grade
Chapter 1 Quiz 15 2.12%
Chapter 2 Quiz 15 2.12%
Chapter 3 Quiz 15 2.12%
Chapter 4 Quiz 15 2.12%
Chapter 5 Quiz 15 2.12%
Chapter 6 Quiz 15 2.12%
Chapter 7 Quiz 15 2.12%
Chapter 8 Quiz 15 2.12%
Chapter 9 Quiz 15 2.12%
Chapter 10 Quiz 15 2.12%
Chapter 11 Quiz 15 2.12%
Chapter 12 Quiz 15 2.12%
Chapter 13 Quiz 15 2.12%
Chapter 14 Quiz 15 2.12%
Chapter 15 Quiz 15 2.12%
Chapter 16 Quiz 15 2.12%
Chapter 17 Quiz 15 2.12%
Chapter 18 Quiz 15 2.12%
Chapter 19 Quiz 15 2.12%
Chapter 20 Quiz 15 2.12%
Chapter 21 Quiz 15 2.12%
Chapter 22 Quiz 15 2.12%
Chapter 23 Quiz 15 2.12%
Chapter 24 Quiz 15 2.12%
Chapter 25 Quiz 15 2.12%
Chapter 26 Quiz 15 2.12%
Chapter 27 Quiz 15 2.12%
Chapter 28 Quiz 15 2.12%
Chapter 29 Quiz 15 2.12%
Chapter 30 Quiz 15 2.12%
Chapter 31 Quiz 15 2.12%
Chapter 32 Quiz 15 2.12%
Chapter 33 Quiz 15 2.12%
Final Exam 70 30.00%
Total 565 100%

 Course Contents and Objectives


Chapter 1 – Welcome to Economics!
Lessons 1.1 What Is Economics, and Why Is It Important?

1.2 Microeconomics and Macroeconomics

1.3 How Economists Use Theories and Models to Understand

Economic Issues

1.4 How To Organize Economies: An Overview of Economic Systems

Objectives •       Discuss the importance of studying economics

•       Explain the relationship between production and division of labor

•       Evaluate the significance of scarcity

•       Describe microeconomics

•       Describe macroeconomics

•       Contrast monetary policy and fiscal policy

•       Interpret a circular flow diagram

•       Explain the importance of economic theories and models

•       Describe goods and services markets and labor markets

•       Contrast traditional economies, command economies, and market economies

•       Explain gross domestic product (GDP)

•       Assess the importance and effects of globalization


Chapter 2 – Choice in a World of Scarcity
Lessons 2.1 How Individuals Make Choices Based on Their Budget


2.2 The Production Possibilities Frontier and Social Choices

2.3 Confronting Objections to the Economic Approach

Objectives •       Calculate and graph budget constraints

•       Explain opportunity sets and opportunity costs

•       Evaluate the law of diminishing marginal utility

•       Explain how marginal analysis and utility influence choices

•       Interpret production possibilities frontier graphs

•       Contrast a budget constraint and a production possibilities frontier

•       Explain the relationship between a production possibilities frontier and the law of diminishing returns

•       Contrast productive efficiency and allocative efficiency

•       Define comparative advantage

  Analyze arguments against economic approaches to decision-making
  Interpret a tradeoff diagram
  Contrast normative statements and positive statements


Chapter 3 – Demand and Supply
Lessons 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services

3.2 Shifts in Demand and Supply for Goods and Services

3.3 Changes in Equilibrium Price and Quantity: The Four-Step


3.4 Price Ceilings and Price Floors

3.5 Demand, Supply, and Efficiency

Objectives •       Explain demand, quantity demanded, and the law of demand

•       Identify a demand curve and a supply curve

•       Explain supply, quantity supplied, and the law of supply

•       Explain equilibrium, equilibrium price, and equilibrium quantity

•       Identify factors that affect demand

•       Graph demand curves and demand shifts

•       Identify factors that affect supply

•       Graph supply curves and supply shifts

•       Identify equilibrium price and quantity through the fourstep process

•       Graph equilibrium price and quantity

•       Contrast shifts of demand or supply and movements along a demand or supply curve

•       Graph demand and supply curves, including equilibrium price and quantity, based on real-world examples

•       Explain price controls, price ceilings, and price floors

•       Analyze demand and supply as a social adjustment mechanism

•       Contrast consumer surplus, producer surplus, and social surplus

•       Explain why price floors and price ceilings can be inefficient

•       Analyze demand and supply as a social adjustment mechanism


Chapter 4 – Labor and Financial Markets
Lessons 4.1 Demand and Supply at Work in Labor Markets

4.2 Demand and Supply in Financial Markets

4.3 The Market System as an Efficient Mechanism for Information

Objectives •     Predict shifts in the demand and supply curves of the labor market
  Explain the impact of new technology on the demand and supply curves of the labor market
  Explain price floors in the labor market such as minimum wage or a living wage
  Identify the demanders and suppliers in a financial market
  Explain how interest rates can affect supply and demand
  Analyze the economic effects of U.S. debt in terms of domestic financial markets
  Explain the role of price ceilings and usury laws in the U.S.
  Apply demand and supply models to analyze prices and quantities
  Explain the effects of price controls on the equilibrium of prices and quantities


Chapter 5 – Elasticity  
Lessons 5.1 Price Elasticity of Demand and Price Elasticity of Supply

5.2 Polar Cases of Elasticity and Constant Elasticity

5.3 Elasticity and Pricing

5.4 Elasticity in Areas Other Than Price

Objectives •       Calculate the price elasticity of demand

•       Calculate the price elasticity of supply

•       Differentiate between infinite and zero elasticity

•       Analyze graphs in order to classify elasticity as constant unitary, infinite, or zero

•       Analyze how price elasticities impact revenue

•       Evaluate how elasticity can cause shifts in demand and supply

•       Predict how the long-run and short-run impacts of elasticity affect equilibrium

•       Explain how the elasticity of demand and supply determine the incidence of a tax on buyers and sellers

•       Calculate the income elasticity of demand and the crossprice elasticity of demand

•       Calculate the elasticity in labor and financial capital markets through an understanding of the elasticity of labor supply and the elasticity of savings

•       Apply concepts of price elasticity to real-world situations


Chapter 6 – Consumer Choices
Lessons 6.1 Consumption Choices

6.2 How Changes in Income and Prices Affect Consumption


6.3 Behavioral Economics: An Alternative Framework for Consumer Choice

Objectives •       Calculate total utility

•       Propose decisions that maximize utility

  Explain marginal utility and the significance of diminishing marginal utility
  Explain how income, prices, and preferences affect consumer choices
  Contrast the substitution effect and the income effect
  Utilize concepts of demand to analyze consumer choices
  Apply utility-maximizing choices to governments and businesses
  Evaluate the reasons for making intertemporal choices
  Interpret an intertemporal budget constraint
  Analyze why people in America tend to save such a small percentage of their income


Chapter 7 – Production, Costs, and Industry Structure
Lessons 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit

7.2 Production in the Short Run

7.3 Costs in the Short Run

7.4 Production in the Long Run

7.5 Costs in the Long Run

Objectives •       Explain the difference between explicit costs and implicit costs

•       Understand the relationship between cost and revenue

•       Understand the concept of a production function

•       Differentiate between the different types of inputs or factors in a production function

•       Differentiate between fixed and variable inputs

•       Differentiate between production in the short run and in the long run

•       Differentiate between total and marginal product

•       Understand the concept of diminishing marginal productivity

•       Understand the relationship between production and costs

•       Understand that every factor of production has a corresponding factor price

•       Analyze short-run costs in terms of total cost, fixed cost, variable cost, marginal cost, and average cost

•       Calculate average profit

•       Evaluate patterns of costs to determine potential profit

•       Understand how long run production differs from short run production.

•       Calculate long run total cost

•       Identify economies of scale, diseconomies of scale, and constant returns to scale

•       Interpret graphs of long-run average cost curves and shortrun average cost curves

  Analyze cost and production in the long run and short run


Chapter 8 – Perfect Competition
Lessons 8.1 Perfect Competition and Why It Matters

8.2 How Perfectly Competitive Firms Make Output Decisions

8.3 Entry and Exit Decisions in the Long Run

8.4 Efficiency in Perfectly Competitive Markets

Objectives •       Explain the characteristics of a perfectly competitive market

•       Discuss how perfectly competitive firms react in the short run and in the long run

•       Calculate profits by comparing total revenue and total cost

•       Identify profits and losses with the average cost curve

•       Explain the shutdown point

•       Determine the price at which a firm should continue producing in the short run

•       Explain how entry and exit lead to zero profits in the long run

•       Discuss the long-run adjustment process

•       Apply concepts of productive efficiency and allocative efficiency to perfectly competitive markets

•       Compare the model of perfect competition to real-world markets


Chapter 9 – Monopoly  
Lessons 9.1 How Monopolies Form: Barriers to Entry

9.2 How a Profit-Maximizing Monopoly Chooses Output and Price

Objectives Distinguish between a natural monopoly and a legal monopoly.
  Explain how economies of scale and the control of natural resources led to the necessary formation of legal monopolies
  Analyze the importance of trademarks and patents in promoting innovation
  Identify examples of predatory pricing
  Explain the perceived demand curve for a perfect competitor and a monopoly
  Analyze a demand curve for a monopoly and determine the output that maximizes profit and revenue
  Calculate marginal revenue and marginal cost
  •     Explain allocative efficiency as it pertains to the efficiency of a monopoly


Chapter 10 – Monopolistic Competition and Oligopoly
Lessons 10.1 Monopolistic Competition
  10.2 Oligopoly
Objectives •       Explain the significance of differentiated products

•       Describe how a monopolistic competitor chooses price and quantity

•       Discuss entry, exit, and efficiency as they pertain to monopolistic competition

•       Analyze how advertising can impact monopolistic competition

•       Explain why and how oligopolies exist

•       Contrast collusion and competition

•       Interpret and analyze the prisoner’s dilemma diagram

•       Evaluate the tradeoffs of imperfect competition


Chapter 11 – Monopoly and Antitrust Policy
Lessons 11.1 Corporate Mergers

11.2 Regulating Anticompetitive Behavior

11.3 Regulating Natural Monopolies

11.4 The Great Deregulation Experiment

Objectives •       Explain antitrust law and its significance

•       Calculate concentration ratios

•       Calculate the Herfindahl-Hirschman Index (HHI)

•       Evaluate methods of antitrust regulation

•       Analyze restrictive practices

•       Explain tying sales, bundling, and predatory pricing

•       Evaluate a real-world situation of possible anticompetitive and restrictive practices

•       Evaluate the appropriate competition policy for a natural monopoly

•       Interpret a graph of regulatory choices

•       Contrast cost-plus and price cap regulation

•       Evaluate the effectiveness of price regulation and antitrust policy

•       Explain regulatory capture and its significance


Chapter 12 – Environmental Protection and Negative Externalities
Lessons 12.1 The Economics of Pollution

12.2 Command-and-Control Regulation

12.3 Market-Oriented Environmental Tools

12.4 The Benefits and Costs of U.S. Environmental Laws

12.5 International Environmental Issues

12.6 The Tradeoff between Economic Output and Environmental Protection

Objectives •       Explain and give examples of positive and negative externalities

•       Identify equilibrium price and quantity

•       Evaluate how firms can contribute to market failure

  Explain command-and-control regulation
  Evaluate the effectiveness of command-and-control regulation
  Show how pollution charges impact firm decisions
  Suggest other laws and regulations that could fall under pollution charges
  Explain the significance of marketable permits and property rights
  Evaluate which policies are most appropriate for various situations
  Evaluate the benefits and costs of environmental protection
  Explain the effects of ecotourism
  Apply marginal analysis to illustrate the marginal costs and marginal benefits of reducing pollution
  Explain biodiversity
  Analyze the partnership of high-income and low-income countries in efforts to address international externalities
  Apply the production possibility frontier to evaluate the tradeoff between economic output and the environment
  Interpret a graphic representation of the tradeoff between economic output and environmental protection


Chapter 13 – Positive Externalities and Public Goods
Lessons 13.1 Why the Private Sector Underinvests in Innovation

13.2 How Governments Can Encourage Innovation 13.3 Public Goods

Objectives •       Identify the positive externalities of new technology

•       Explain the difference between private benefits and social benefits and give examples of each

•       Calculate and analyze rates of return

•       Explain the effects of intellectual property rights on social and private rates of return

•       Identify three U.S. Government policies and explain how they encourage innovation

•       Identify a public good using nonexcludable and non-rival as criteria

•       Explain the free rider problem

•       Identify several sources of public goods


Chapter 14 – Labor Markets and Income
Lessons 14.1 The Theory of Labor Markets

14.2 Wages and Employment in an Imperfectly Competitive Labor


14.3 Market Power on the Supply Side of Labor Markets: Unions

14.4 Bilateral Monopoly

14.5 Employment Discrimination

  14.6 Immigration
Objectives •       Describe the demand for labor in perfectly competitive output markets

•       Describe the demand for labor in imperfectly competitive output markets

•       Explain what determines the going market wage rate

•       Define monopsony power

•       Explain how imperfectly competitive labor markets determine wages and employment, where employers have market power

•       Explain the concept of labor unions, including membership levels and wages

•       Evaluate arguments for and against labor unions

•       Analyze reasons for the decline in U.S. union membership

•       Explain how firms determine wages and employment when a specific labor market combines a union and a monopsony

•       Analyze earnings gaps based on race and gender

•       Explain the impact of discrimination in a competitive market

•       Identify U.S. public policies designed to reduce discrimination

•       Explain how immigration affects labor market outcomes


Chapter 15 – Poverty and Economic Inequality
Lessons 15.1 Drawing the Poverty Line

15.2 The Poverty Trap

15.3 The Safety Net

15.4 Income Inequality: Measurement and Causes

15.5 Government Policies to Reduce Income Inequality

Objectives •       Explain economic inequality and how the poverty line is determined

•       Analyze the U.S. poverty rate over time, noting its prevalence among different groups of citizens

•       Explain the poverty trap, noting how government programs impact it

•       Identify potential issues in government programs that seek to reduce poverty

•       Calculate a budget constraint line that represents the poverty trap

•       Identify the antipoverty government programs that comprise the safety net

•       Explain the the safety net programs' primary goals and how these programs have changed over time

•       Discuss the complexities of these safety net programs and why they can be controversial

  Explain the distribution of income, and analyze the sources of income inequality in a market economy
  Measure income distribution in quintiles
  Calculate and graph a Lorenz curve
  Show income inequality through demand and supply diagrams
  Explain the arguments for and against government intervention in a market economy
  Identify beneficial ways to reduce the economic inequality in a society
  Show the tradeoff between incentives and income equality


Chapter 16 – Information, Risk, and Insurance
Lessons 16.1 The Problem of Imperfect Information and Asymmetric Information

16.2 Insurance and Imperfect Information

Objectives •       Analyze the impact of both imperfect information and asymmetric information

•       Evaluate the role of advertisements in creating imperfect information

•       Identify ways to reduce the risk of imperfect information

•       Explain how imperfect information can affect price, quantity, and quality

•       Explain how insurance works

•       Identify and evaluate various forms of government and social insurance

•       Discuss the problems caused by moral hazard and adverse selection

•       Analyze the impact of government regulation of insurance


Chapter 17 – Financial Markets
Lessons 17.1 How Businesses Raise Financial Capital

17.2 How Households Supply Financial Capital

17.3 How to Accumulate Personal Wealth

Objectives •       Describe financial capital and how it relates to profits

•       Discuss the purpose and process of borrowing, bonds, and corporate stock

•       Explain how firms choose between sources of financial capital

•       Show the relationship between savers, banks, and borrowers

•       Calculate bond yield

•       Contrast bonds, stocks, mutual funds, and assets

•       Explain the tradeoffs between return and risk

•       Explain the random walk theory

•       Calculate simple and compound interest

  Evaluate how capital markets transform financial capital


Chapter 18 – Public Economy
Lessons 18.1 Voter Participation and Costs of Elections

18.2 Special Interest Politics

18.3 Flaws in the Democratic System of Government

Objectives •       Explain the significance of rational ignorance

•       Evaluate the impact of election expenses

•       Explain how special interest groups and lobbyists can influence campaigns and elections

•       Describe pork-barrel spending and logrolling

•       Assess the median voter theory

•       Explain the voting cycle

•       Analyze the interrelationship between markets and government


Chapter 19 – The Macroeconomic Perspective
Lessons 19.1 Measuring the Size of the Economy: Gross Domestic Product

19.2 Adjusting Nominal Values to Real Values

19.3 Tracking Real GDP over Time

19.4 Comparing GDP among Countries

19.5 How Well GDP Measures the Well-Being of Society

Objectives •       Identify the components of GDP on the demand side and on the supply side

•       Evaluate how economists measure gross domestic product (GDP)

•       Contrast and calculate GDP, net exports, and net national product

•       Contrast nominal GDP and real GDP

•       Explain GDP deflator

•       Calculate real GDP based on nominal GDP values

•       Explain recessions, depressions, peaks, and troughs

•       Evaluate the importance of tracking real GDP over time

•       Explain how we can use GDP to compare the economic welfare of different nations

•       Calculate the conversion of GDP to a common currency by using exchange rates

•       Calculate GDP per capita using population data

•       Discuss how productivity influences the standard of living

•       Explain the limitations of GDP as a measure of the standard of living

•       Analyze the relationship between GDP data and fluctuations in the standard of living


Chapter 20 – Economic Growth
Lessons 20.1 The Relatively Recent Arrival of Economic Growth
  20.2 Labor Productivity and Economic Growth

20.3 Components of Economic Growth

20.4 Economic Convergence

Objectives •       Explain the conditions that have allowed for modern economic growth in the last two centuries

•       Analyze the influence of public policies on an economy's long-run economic growth

•       Identify the role of labor productivity in promoting economic growth

•       Analyze the sources of economic growth using the aggregate production function

•       Measure an economy’s rate of productivity growth

•       Evaluate the power of sustained growth

•       Discuss the components of economic growth, including physical capital, human capital, and technology

•       Explain capital deepening and its significance

•       Analyze the methods employed in economic growth accounting studies

•       Identify factors that contribute to a healthy climate for economic growth

•       Explain economic convergence

•       Analyze various arguments for and against economic convergence

•       Evaluate the speed of economic convergence between high-income countries and the rest of the world


Chapter 21 – Unemployment
Lessons 21.1 How Economists Define and Compute Unemployment Rate

21.2 Patterns of Unemployment

21.3 What Causes Changes in Unemployment over the Short Run

21.4 What Causes Changes in Unemployment over the Long Run

Objectives •       Calculate the labor force participation rate and the unemployment rate

•       Explain hidden unemployment and what it means to be in or out of the labor force

•       Evaluate the collection and interpretation of unemployment data

•       Explain historical patterns of unemployment in the U.S.

•       Identify trends of unemployment based on demographics

•       Evaluate global unemployment rates

•       Analyze cyclical unemployment

•       Explain the relationship between sticky wages and employment using various economic arguments

•       Apply supply and demand models to unemployment and wages

•       Explain frictional and structural unemployment

  Assess relationships between the natural rate of employment and potential real GDP, productivity, and public policy
  Identify recent patterns in the natural rate of employment
  Propose ways to combat unemployment


Chapter 22 – Inflation  
Lessons 22.1 Tracking Inflation

22.2 How to Measure Changes in the Cost of Living

22.3 How the U.S. and Other Countries Experience Inflation

22.4 The Confusion Over Inflation

22.5 Indexing and Its Limitations

Objectives •       Calculate the annual rate of inflation

•       Explain and use index numbers and base years when simplifying the total quantity spent over a year for products

•       Calculate inflation rates using index numbers

•       Use the Consumer Price Index (CPI) to calculate U.S.

inflation rates

•       Identify several ways the Bureau of Labor Statistics avoids biases in the Consumer Price Index (CPI)

•       Differentiate among the Consumer Price Index (CPI), the Producer Price Index (PPI), the International Price Index, the Employment Cost Index, and the GDP deflator.

•       Identify patterns of inflation for the United States using data from the Consumer Price Index

•       Identify patterns of inflation on an international level

•       Explain how inflation can cause redistributions of purchasing power

•       Identify ways inflation can blur the perception of supply and demand

•       Explain the economic benefits and challenges of inflation

•       Explain the relationship between indexing and inflation

•       Identify three ways the government can control inflation through macroeconomic policy


Chapter 23 – The International Trade and Capital Flows
Lessons 23.1 Measuring Trade Balances

23.2 Trade Balances in Historical and International Context

23.3 Trade Balances and Flows of Financial Capital

23.4 The National Saving and Investment Identity

23.5 The Pros and Cons of Trade Deficits and Surpluses

23.6 The Difference between Level of Trade and the Trade Balance

Objectives •       Explain merchandise trade balance, current account balance, and unilateral transfers

•       Identify components of the U.S. current account balance

  Calculate the merchandise trade balance and current account balance using import and export data for a country
  Analyze graphs of the current account balance and the merchandise trade balance
  Identify patterns in U.S. trade surpluses and deficits
  Compare the U.S. trade surpluses and deficits to other countries' trade surpluses and deficits
  Explain the connection between trade balances and financial capital flows
  Calculate comparative advantage
  Explain balanced trade in terms of investment and capital flows
  Explain the determinants of trade and current account balance
  Identify and calculate supply and demand for financial capital
  Explain how a nation's own level of domestic saving and investment determines a nation's balance of trade
  Predict the rising and falling of trade deficits based on a nation's saving and investment identity
  Identify three ways in which borrowing money or running a trade deficit can result in a healthy economy
  Identify three ways in which borrowing money or running a trade deficit can result in a weaker economy
  Identify three factors that influence a country's level of trade
  Differentiate between balance of trade and level of trade


Chapter 24 – The Aggregate Demand/Aggregate Supply Model
Lessons 24.1 Macroeconomic Perspectives on Demand and Supply

24.2 Building a Model of Aggregate Demand and Aggregate Supply

24.3 Shifts in Aggregate Supply

24.4 Shifts in Aggregate Demand

24.5 How the AD/AS Model Incorporates Growth, Unemployment, and Inflation

24.6 Keynes’ Law and Say’s Law in the AD/AS Model

Objectives •       Explain Say’s Law and understand why it primarily applies in the long run

•       Explain Keynes’ Law and understand why it primarily applies in the short run

•       Explain the aggregate supply curve and how it relates to real GDP and potential GDP

•       Explain the aggregate demand curve and how it is influenced by price levels

•       Interpret the aggregate demand/aggregate supply model

  Identify the point of equilibrium in the aggregate demand/aggregate supply model
  Define short run aggregate supply and long run aggregate supply
  Explain how productivity growth changes the aggregate supply curve
  Explain how changes in input prices change the aggregate supply curve
  Explain how imports influence aggregate demand
  Identify ways in which business confidence and consumer confidence can affect aggregate demand
  Explain how government policy can change aggregate demand
  Evaluate why economists disagree on the topic of tax cuts
  Use the aggregate demand/aggregate supply model to show periods of economic growth and recession
  Explain how unemployment and inflation impact the aggregate demand/aggregate supply model
  Evaluate the importance of the aggregate demand/aggregate supply model
  Identify the neoclassical zone, the intermediate zone, and the Keynesian zone in the aggregate demand/aggregate supply model
  Use an aggregate demand/aggregate supply model as a diagnostic test to understand the current state of the economy


Chapter 25 – The Keynesian Perspective
Lessons 25.1 Aggregate Demand in Keynesian Analysis

25.2 The Building Blocks of Keynesian Analysis

25.3 The Phillips Curve

25.4 The Keynesian Perspective on Market Forces

Objectives •       Explain real GDP, recessionary gaps, and inflationary gaps

•       Recognize the Keynesian AD/AS model

•       Identify the determining factors of both consumption expenditure and investment expenditure

•       Analyze the factors that determine government spending and net exports

•       Evaluate the Keynesian view of recessions through an understanding of sticky wages and prices and the importance of aggregate demand

•       Explain the coordination argument, menu costs, and macroeconomic externality

•       Analyze the impact of the expenditure multiplier

•       Explain the Phillips curve, noting its impact on the theories of Keynesian economics

  Graph a Phillips curve
  Identify factors that cause the instability of the Phillips curve
  Analyze the Keynesian policy for reducing unemployment and inflation
  Explain the Keynesian perspective on market forces
  Analyze the role of government policy in economic management


Chapter 26 – The Neoclassical Perspective
Lessons 26.1 The Building Blocks of Neoclassical Analysis

26.2 The Policy Implications of the Neoclassical Perspective

26.3 Balancing Keynesian and Neoclassical Models

Objectives •       Explain the importance of potential GDP in the long run

•       Analyze the role of flexible prices

•       Interpret a neoclassical model of aggregate demand and aggregate supply

•       Evaluate different ways for measuring the speed of macroeconomic adjustment

•       Discuss why and how economists measure inflation expectations

•       Analyze the impacts of fiscal and monetary policy on aggregate supply and aggregate demand

•       Explain the neoclassical Phillips curve, noting its tradeoff between inflation and unemployment

•       Identify clear distinctions between neoclassical economics and Keynesian economics

•       Evaluate how neoclassical economists and Keynesian economists react to recessions

•       Analyze the interrelationship between the neoclassical and Keynesian economic models


Chapter 27 – Money and Banking
Lessons 27.1 Defining Money by Its Functions

27.2 Measuring Money: Currency, M1, and M2

27.3 The Role of Banks

27.4 How Banks Create Money

Objectives •       Explain the various functions of money

•       Contrast commodity money and fiat money

•       Contrast M1 money supply and M2 money supply

•       Classify monies as M1 money supply or M2 money supply

•       Explain how banks act as intermediaries between savers and borrowers

•       Evaluate the relationship between banks, savings and loans, and credit unions

•       Analyze the causes of bankruptcy and recessions

  Utilize the money multiplier formulate to determine how banks create money
  Analyze and create T-account balance sheets
  Evaluate the risks and benefits of money and banks


Chapter 28 – Monetary Policy and Bank Regulation
Lessons 28.1 The Federal Reserve Banking System and Central Banks

28.2 Bank Regulation

28.3 How a Central Bank Executes Monetary Policy

28.4 Monetary Policy and Economic Outcomes

28.5 Pitfalls for Monetary Policy

Objectives •       Explain the structure and organization of the U.S. Federal Reserve

•       Discuss how central banks impact monetary policy, promote financial stability, and provide banking services

•       Discuss the relationship between bank regulation and monetary policy

•       Explain bank supervision

•       Explain how deposit insurance and lender of last resort are two strategies to protect against bank runs

•       Explain the reason for open market operations

•       Evaluate reserve requirements and discount rates

•       Interpret and show bank activity through balance sheets

•       Contrast expansionary monetary policy and contractionary monetary policy

•       Explain how monetary policy impacts interest rates and aggregate demand

•       Evaluate Federal Reserve decisions over the last forty years

•       Explain the significance of quantitative easing (QE)

•       Analyze whether monetary policy decisions should be made more democratically

•       Calculate the velocity of money

•       Evaluate the central bank’s influence on inflation, unemployment, asset bubbles, and leverage cycles

•       Calculate the effects of monetary stimulus


Chapter 29 – Exchange Rates and International Capital Flows
Lessons 29.1 How the Foreign Exchange Market Works

29.2 Demand and Supply Shifts in Foreign Exchange Markets

29.3 Macroeconomic Effects of Exchange Rates

29.4 Exchange Rate Policies

Objectives •       Define "foreign exchange market"

•       Describe different types of investments like foreign direct investments (FDI), portfolio investments, and hedging

•       Explain how appreciating or depreciating currency affects exchange rates

  Identify who benefits from a stronger currency and benefits from a weaker currency
  Explain supply and demand for exchange rates
  Define arbitrage
  Explain purchasing power parity's importance when comparing countries.
  Explain how exchange rate shifting influences aggregate demand and supply
  Explain how shifting exchange rates also can influence loans and banks
  Differentiate among a floating exchange rate, a soft peg, a hard peg, and a merged currency
  Identify the tradeoffs that come with a floating exchange rate, a soft peg, a hard peg, and a merged currency


Chapter 30 – Government Budgets and Fiscal Policy
Lessons 30.1 Government Spending

30.2 Taxation

30.3 Federal Deficits and the National Debt

30.4 Using Fiscal Policy to Fight Recession, Unemployment, and Inflation

30.5 Automatic Stabilizers

30.6 Practical Problems with Discretionary Fiscal Policy

30.7 The Question of a Balanced Budget

Objectives •       Identify U.S. budget deficit and surplus trends over the past five decades

•       Explain the differences between the U.S. federal budget, and state and local budgets

•       Differentiate among a regressive tax, a proportional tax, and a progressive tax

•       Identify major revenue sources for the U.S. federal budget

•       Explain the U.S. federal budget in terms of annual debt and accumulated debt

•       Understand how economic growth or decline can influence a budget surplus or budget deficit

•       Explain how expansionary fiscal policy can shift aggregate demand and influence the economy

•       Explain how contractionary fiscal policy can shift aggregate demand and influence the economy

•       Describe how the federal government can use discretionary fiscal policy to stabilize the economy

•       Identify examples of automatic stabilizers

•       Understand how a government can use standardized employment budget to identify automatic stabilizers

•       Understand how fiscal policy and monetary policy are interconnected

  Explain the three lag times that often occur when solving economic problems
  Identify the legal and political challenges of responding to an economic problem
  Understand the arguments for and against requiring the U.S. federal budget to be balanced
  Consider the long-run and short-run effects of a federal budget deficit


Chapter 31 – The Impacts of Government Borrowing
Lessons 31.1 How Government Borrowing Affects Investment and the

Trade Balance

31.2 Fiscal Policy and the Trade Balance

31.3 How Government Borrowing Affects Private Saving

31.4 Fiscal Policy, Investment, and Economic Growth

Objectives •       Explain the national saving and investment identity in terms of demand and supply

•       Evaluate the role of budget surpluses and trade surpluses in national saving and investment identity

•       Discuss twin deficits as they related to budget and trade deficit

•       Explain the relationship between budget deficits and exchange rates

•       Explain the relationship between budget deficits and inflation

•       Identify causes of recessions

•       Apply Ricardian equivalence to evaluate how government borrowing affects private saving

•       Interpret a graphic representation of Ricardian equivalence

•       Explain crowding out and its effect on physical capital investment

•       Explain the relationship between budget deficits and interest rates

•       Identify why economic growth is tied to investments in physical capital, human capital, and technology


Chapter 32 – Macroeconomic Policy Around the World
Lessons 32.1 The Diversity of Countries and Economies across the World

32.2 Improving Countries’ Standards of Living

32.3 Causes of Unemployment around the World

32.4 Causes of Inflation in Various Countries and Regions 32.5 Balance of Trade Concerns

Objectives •       Analyze GDP per capita as a measure of the diversity of international standards of living

•       Identify what classifies a country as low-income, middleincome, or high-income

  Explain how geography, demographics, industry structure, and economic institutions influence standards of living
  Analyze the growth policies of low-income countries seeking to improve standards of living
  Analyze the growth policies of middle-income countries, particularly the East Asian Tigers with their focus on technology and market-oriented incentives
  Analyze the struggles facing economically-challenged countries wishing to enact growth policies
  Evaluate the success of sending aid to low-income countries
  Explain the nature and causes of unemployment
  Analyze the natural rate of unemployment and the factors that affect it
  Identify how undeveloped labor markets can result in the same hardships as unemployment
  Identify the causes and effects of inflation in various economic markets
  Explain the significance of a converging economy
  Explain the meaning of trade balance and its implications for the foreign exchange market
  Analyze concerns over international trade in goods and services and international flows of capital
  Identify and evaluate market-oriented economic reforms


Chapter 33 – International Trade
Lessons 33.1 Absolute and Comparative Advantage

33.2 What Happens When a Country Has an Absolute Advantage in All Goods

33.3 Intra-industry Trade between Similar Economies

33.4 The Benefits of Reducing Barriers to International Trade

Objectives •       Define absolute advantage, comparative advantage, and opportunity costs

•       Explain the gains of trade created when a country specializes

•       Show the relationship between production costs and comparative advantage

•       Identify situations of mutually beneficial trade

•       Identify trade benefits by considering opportunity costs

•       Identify at least two advantages of intra-industry trading

•       Explain the relationship between economies of scale and intra-industry trade

•       Explain tariffs as barriers to trade

•       Identify at least two benefits of reducing barriers to international trade


Chapter 34 – Globalization and Protectionism
Lessons 34.1 Protectionism: An Indirect Subsidy from Consumers to


34.2 International Trade and Its Effects on Jobs, Wages, and

Working Conditions

34.3 Arguments in Support of Restricting Imports

34.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally

34.5 The Tradeoffs of Trade Policy

Objectives •       Explain protectionism and its three main forms

•       Analyze protectionism through concepts of demand and supply, noting its effects on equilibrium

•       Calculate the effects of trade barriers

•       Discuss how international trade influences the job market

•       Analyze the opportunity cost of protectionism

•       Explain how international trade impacts wages, labor standards, and working conditions

•       Explain and analyze various arguments that are in support of restricting imports, including the infant industry argument, the anti-dumping argument, the environmental protection argument, the unsafe consumer products argument, and the national interest argument

•       Explain dumping and race to the bottom

•       Evaluate the significance of countries’ perceptions on the benefits of growing trade

•       Explain the origin and role of the World Trade

Organization (WTO) and General Agreement on Tariffs and Trade (GATT)

•       Discuss the significance and provide examples of regional trading agreements

•       Analyze trade policy at the national level

•       Evaluate long-term trends in barriers to trade

•       Assess the complexity of international trade

•       Discuss why a market-oriented economy is so affected by international trade

•       Explain disruptive market change

 ACE Principles of Economics (3 Semester Credits)