AP Macroeconomics Reading and Writing Workshop

​The Effects of Fiscal and Monetary Policy on Economic Growth

Objective: Students will analyze how fiscal policy (government spending/taxation) and monetary policy (money supply/interest rates) affect economic growth. They will develop writing & discussion skills via group work, primary-source excerpts (public domain), peer review, and a final draft of an FRQ-style answer.
Materials
Here are public-domain (or freely accessible) primary sources: “Every tax, it must be observed once for all, which falls finally upon one only of the three sorts of revenue above mentioned, is necessarily unequal, in so far as it does not affect the other two.” (Marxists) “Credit not a creation but a transfer of the means of production …” (Wikisource) “In Books III. and IV. of this Treatise I propose a novel means of approach to the fundamental problems of monetary theory.” (ia601502.us.archive.org)
Workshop Structure (with Groups)
Break the class into three groups, each group takes one of the major thinkers (Smith, Mill, Keynes) and focuses on key questions, then later all groups come together for synthesis and writing. (Funny bonus: you can name the groups “Team Smith”, “Team Mill”, “Team Keynes” — students love a little rivalry.)
Part 1: Reading & Discussion (30 minutes)
  • Assign each group their primary source excerpt (above) and give them guiding questions.
  • Team Smith: Read Chapter 2 of Book V of The Wealth of Nations. Questions:
    1. What does Smith say about taxation and the three kinds of revenue (rent, profit, wages)? (Marxists)
    2. In what way does Smith believe taxation affects economic growth (positively or negatively)?
    3. Share with your classmates one quote you found surprising or relevant to today’s policy.
  • Team Mill: Read the Money/Credit chapters in Principles of Political Economy. Questions:
    1. What role does Mill assign to credit and money in supporting production? (Wikisource)
    2. What governmental/interventionist role does Mill suggest (if any) in facilitating money/credit?
    3. How might Mill’s views interface with modern monetary policy?
  • Team Keynes: Read the excerpt from A Treatise on Money. Questions:
    1. What is Keynes identifying as the lever of monetary policy (money supply, interest rate)? (ia601502.us.archive.org)
    2. Under what conditions does he argue monetary policy is especially needed (recession, low growth)?
    3. Give one modern example (post-2008 or recent) where you think Keynes’s insights apply.
After 20 minutes reading + group discussion, each team shares a 2-minute summary of their source and their key insight with the full class.
Part 2: Guided Discussion & Group Jigsaw (20 minutes)
  • Now reorganize: form new mixed groups, each containing one student from Team Smith, one from Team Mill, one from Team Keynes.
  • In these mixed groups:
    1. Each student teaches a 2-minute “mini-lesson” to the others about their source.
    2. Then the group answers these synthesis questions:
      • How do the views of Smith, Mill, and Keynes differ or align regarding government spending/taxation?
      • How do they differ or align regarding money/credit/monetary policy?
      • Based on their combined insights, what might be one “best practice” or caution for modern fiscal/monetary policy aimed at growth?
  • Each group writes a short bullet list (on chart paper or shared doc) of 3 policy recommendations or cautions derived from the sources.
Part 3: AP-Style Free Response Writing (30 minutes)
Return students to their original teams (Team Smith, Team Mill, Team Keynes). Each team now completes one of two FRQs, using their primary-source knowledge and the synthesis insight from part 2.
FRQ 1 (Fiscal Policy & Growth):
  • Assume the economy is in a recession.
    a. Define fiscal policy (government spending and taxation) and explain how expansionary fiscal policy could promote economic growth.
    b. Using an AD-AS (aggregate demand/aggregate supply) model, illustrate the short-run impact of increased government spending.
    c. Identify a potential long-run consequence of sustained expansionary fiscal policy and explain its effect on economic growth.
FRQ 2 (Monetary Policy & Growth):
  • Assume the central bank is concerned about slow economic growth.
    a. Define monetary policy (control of money supply, interest rates) and explain how expansionary monetary policy can stimulate growth.
    b. Describe how changes in interest rates influence investment and consumption.
    c. Identify and explain one limitation of monetary policy for promoting long-term growth.
Assign which team does which FRQ (for example: Team Smith & Team Mill do FRQ 1, Team Keynes does FRQ 2) so each team focuses on area aligned to their thinker—but encourage all students to draw on insights from all three sources.
Each team writes a first draft (10-12 minutes).
Part 4: Peer Review & Revision (15 minutes)
  • Teams swap their drafts with another team. Each reviewer uses a simple rubric:
    • Does the response clearly define terms?
    • Is the economic model (AD/AS or interest/investment) correctly described?
    • Does the team incorporate evidence (quotes or paraphrase) from their source?
    • Is the argument logical? Are long-run consequences addressed?
    • Is the writing clear and well-organized?
  • Reviewers write two suggestions for improvement. Then teams revise their drafts.
Part 5: Final Submission & Class Debrief (10 minutes)
  • Teams turn in final drafts.
  • As a closing class discussion: ask each team one quick “aha” moment they had about how historical economic thought influences modern policy. (Bonus: ask “what surprised you?”)
  • Optionally, you can poll: “If you were the government right now, would you favour fiscal stimulus or monetary easing (or both)? Why?” and link back to the thinkers.
Assessment Criteria
Clear criteria to give to students (and display) for peer review and final assessment:
  • Accurate definitions of key concepts (fiscal policy, monetary policy).
  • Correct use of economic models (e.g., AD/AS, investment link to interest rates).
  • Use of evidence from primary sources (Smith/Mill/Keynes) to support arguments.
  • Logical structure and coherent argumentation.
  • Clear writing, correct economic terminology, minimal grammar errors.
Adaptations & Extra Activities
  • Extension (for advanced students): Ask students to bring a recent news article (last 6 months) on U.S. fiscal/monetary policy and map it onto one of the thinkers’ frameworks.
  • Interactive Game: Create flash-cards of each thinker’s key idea (one side: “taxation falls ultimately on …”, other side: “rent/profit/wages” — from Smith). Students shuffle and quiz each other.
  • Gallery Walk: After bullet-lists from the jigsaw groups are posted, students walk around and add sticky-notes with “I agree”, “I question”, along with a short reason.
  • Exit Ticket: At end of class, ask: “Which policy lever (spending/tax or interest/money) do you think has the bigger impact on growth? And which thinker influenced your view?” Have students write a quick sentence.
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