Required Reading Summer/Winter Reading In an effort for Advanced Placement Macroeconomics, you should read the following selection:

1. Wheelan, Charles. Naked Economics. ISBN 0-393-32486-9 This book serves as an introduction to Economics without complex graphs or equations. This synthesis of economic principles with contemporary society will be invaluable to an AP student. o As you read this selection, answer the questions that correspond with each chapter.

Ch 1 The Power of Market: A. Explain the concepts of utility and opportunity costs.

B. List two out of the four basic economic questions as seen in Chapter 1. 1. 2.

Ch 2 Incentives Matter A. Explain how incentives motivate capitalists and communist economies?

Ch 3 Government and the Economy A. How does a market economy deal with externalities?

B. Why does our government provide its citizens public goods?

Ch 4 Government and the Economy II A. What is meant by the concept fiscal drag when talking about government spending?

Ch 5 Economics of Information A. What effects does branding have on your economic decisions?

Ch 6 Productivity and Human Capital A. Explain the correlation between a countrys level of human capital and its economic performance.

Ch 7 Financial Markets You are a certified financial planner giving investment advice to your client. Assume inflation rate is 6%. A. Barbara Washington is a retiree. Her net worth exceeds 500 million dollars. In conversation, you find out a majority of her money is buried in suitcases in her backyard because it is safe there. (1) Formulate an argument giving two examples why she is better off putting the money into a bank.

Ch 8 The Power of Organized Interests A. How can organized interest groups be detrimental to economic growth?

B. Give an example of a job lost due to creative destruction. Explain.

Ch 9 Keeping Score A. Define GDP (Gross Domestic Product).

B. What is the difference between real and nominal GDP?

C. Explain two reasons why GDP is not a comprehensive measure of the performance of the economy.

Ch 10 The Federal Reserve A. What happens to prices during inflation?

B. What happens to the purchasing power of the dollar during periods of inflation?

C. Discuss the difference between the discount rate and the federal funds rate.

Ch 11 Trade and Globalization A. Construct an argument for free trade citing two specific reasons.

Ch 12 Developing Economies A. Why is property rights and human capital important to the economic growth of developing nations?