This lesson covers Topics 2.1-2.2 and 2.6-2.7 in the AP Syllabus. Today we will begin to study macroeconomics by revisiting the circular flow model and analyzing business cycles and GDP.
Assignments
Read: Krugman (Modules 1, 2,10, 11, and 16)
Watch: The video lecture for today's topic (linked above).
Optional: The videos linked below.
Formative Assessment (MCQ's): You will take a formal assessment during class. The assessment will consist of multiple-choice questions and one FRQ from an old AP Exam. Doing the problem of the day and ensuring that you understand it will help you prepare for today's formative assessment and help to ensure that you understand the concepts in this lesson.
Problem of the Day
Use a numerical example to explain how inflation makes nominal GDP an unreliable statistic in comparing a country's GDP in two different time periods.
Assume that there is a ceiling on the price of rice in Eaglestan.
Use a supply and demand diagram to explain why a black market may develop in Eaglestan.
Explain how the existence of the black market in rice makes the official GDP figure in Eaglestan a less reliable measure of economic well-being there.