AP Macroeconomics Reading and Writing Workshop
Reading and Writing Workshop: Money, Banking, and Financial Markets
Objective:
Students will analyze key economic principles related to money, banking, and financial markets through public domain readings. They will apply these concepts in written responses, including free-response questions (FRQs), to develop critical thinking and economic reasoning skills.
Part 1: Reading and Analysis
Primary Reading Sources (Public Domain)
Part 2: Writing Workshop
Activity 1: Short Analysis Response
Students will write a one-page analysis comparing the views of two economists from the readings, focusing on their perspectives on money and banking.
Prompt:
Compare and contrast the views of Adam Smith and John Stuart Mill on the role of banks in the economy. How would each economist view the role of the Federal Reserve today?
Activity 2: Free-Response Questions (FRQs)
FRQ 1: The Role of Money in the Economy
Prompt:
a. Define the three primary functions of money.
b. Explain how inflation can reduce money’s usefulness as a store of value.
c. Using a supply and demand diagram, show how an increase in the money supply can impact interest rates.
FRQ 2: Banking Systems and Monetary Policy
Prompt:
a. Describe the process of fractional reserve banking and its impact on money creation.
b. Explain the role of the Federal Reserve in managing the money supply.
c. Analyze how the Federal Reserve can use open market operations to combat inflation.
FRQ 3: Financial Markets and Economic Growth
Prompt:
a. Explain how financial markets facilitate economic growth.
b. Describe the difference between stocks and bonds as financial assets.
c. Using the loanable funds market, show the impact of an increase in government borrowing on real interest rates.
Part 3: Workshop Review and Peer Feedback
Assessment and Reflection
Objective:
Students will analyze key economic principles related to money, banking, and financial markets through public domain readings. They will apply these concepts in written responses, including free-response questions (FRQs), to develop critical thinking and economic reasoning skills.
Part 1: Reading and Analysis
Primary Reading Sources (Public Domain)
- Adam Smith - The Wealth of Nations (1776)
- Suggested Excerpts: Book II, Chapter 2 - Of Money Considered as a Particular Branch of the General Stock of the Society
- Key Focus: Role of money in trade and economic activity
- John Stuart Mill - Principles of Political Economy (1848)
- Suggested Excerpts: Book III, Chapters 8-10 - On Credit and Banking
- Key Focus: The function of banks and the influence of credit in the economy
- Walter Bagehot - Lombard Street: A Description of the Money Market (1873)
- Suggested Excerpts: Chapter 2 - Why Lombard Street is Often Very Dull and Sometimes Extremely Excited
- Key Focus: Financial markets, liquidity, and banking stability
- How do Smith and Mill differ in their views on money and banking?
- What role do financial markets play in economic stability, according to Bagehot?
- How are the ideas from these historical texts still relevant to modern financial systems?
Part 2: Writing Workshop
Activity 1: Short Analysis Response
Students will write a one-page analysis comparing the views of two economists from the readings, focusing on their perspectives on money and banking.
Prompt:
Compare and contrast the views of Adam Smith and John Stuart Mill on the role of banks in the economy. How would each economist view the role of the Federal Reserve today?
Activity 2: Free-Response Questions (FRQs)
FRQ 1: The Role of Money in the Economy
Prompt:
a. Define the three primary functions of money.
b. Explain how inflation can reduce money’s usefulness as a store of value.
c. Using a supply and demand diagram, show how an increase in the money supply can impact interest rates.
FRQ 2: Banking Systems and Monetary Policy
Prompt:
a. Describe the process of fractional reserve banking and its impact on money creation.
b. Explain the role of the Federal Reserve in managing the money supply.
c. Analyze how the Federal Reserve can use open market operations to combat inflation.
FRQ 3: Financial Markets and Economic Growth
Prompt:
a. Explain how financial markets facilitate economic growth.
b. Describe the difference between stocks and bonds as financial assets.
c. Using the loanable funds market, show the impact of an increase in government borrowing on real interest rates.
Part 3: Workshop Review and Peer Feedback
- Group Discussion: Students will share their written responses in small groups and provide feedback using a rubric.
- Teacher-Led Review: Review key takeaways from student responses and clarify economic concepts.
- Revision Opportunity: Students will refine their FRQ responses based on peer and teacher feedback.
Assessment and Reflection
- Scoring Rubric: Use AP Macroeconomics FRQ grading guidelines.
- Exit Reflection: Students write a one-paragraph reflection on how historical perspectives on money and banking influence modern economic policies.