AP®︎ Macroeconomics Unit 2: Notes & Study Guide
Prepare for your quiz, test, or the AP exam with a comprehensive review on Unit 2 of AP Macroeconomics – Economic Indicators and the Business Cycle.
Unit 2: Economic Indicators and the Business Cycle
This unit focuses on how to measure economic performance using indicators like GDP, unemployment, and inflation, and how they relate to the business cycle.
Begin with Topic 2.1: The Circular Flow and GDPTo review Unit 2, go through each of the 7 topics below.
Everything you actually need to know for your Unit 2 test, pulled directly from the AP® Macroeconomics curriculum.
The Circular Flow and GDP
The Circular Flow and GDP
- Gross Domestic Product
- The Circular Flow Model
- The Three Ways to Measure GDP
Limitations of GDP
Limitations of GDP
- What GDP Measures and Why Economists Use It
- What GDP Leaves Out
- GDP and Standard of Living
Unemployment
Unemployment
- The Labor Force, Unemployment Rate, and Participation Rate
- The Three Types of Unemployment
- The Natural Rate of Unemployment and Full Employment
Price Indices and Inflation
Price Indices and Inflation
- The Consumer Price Index and What It Measures
- How to Calculate CPI and the Inflation Rate
- Nominal vs Real Values
Costs of Inflation
Costs of Inflation
- Unexpected Inflation and Deflation
- Redistribution Between Borrowers and Lenders
- Other Groups Helped or Hurt
Real v. Nominal GDP
Real v. Nominal GDP
- Nominal GDP vs Real GDP
- Calculating Nominal and Real GDP
- The GDP Deflator
Business Cycles
Business Cycles
- What the Business Cycle Is
- Phases and Turning Points of the Business Cycle
- Potential Output and the Output Gap
Notes
1 credit used · 5/5 remaining