ECO : PRINCIPLES OF MICROECONOMICS Mondays, Wednesdays, and Fridays 11:00 am 11:50 am 160 Bryan Building FALL 2009

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1 ECO : PRINCIPLES OF MICROECONOMICS Mondays, Wednesdays, and Fridays 11:00 am 11:50 am 160 Bryan Building FALL 2009 INSTRUCTOR INFORMATION Dennis Patrick Leyden 460 Bryan Building, Office hours: Mondays 2:00 pm 4:00 pm, or by appointment. FOR WHOM PLANNED This course is intended primarily for freshman and sophomore undergraduate students who want an introduction to the economic analysis of national economies. ACADEMIC CREDIT 3 semester hours of academic credit. This course also carries General Education Core (GEC) credit in the Social & Behavioral Sciences (GSB) category. PREREQUISITE ECO 101 or ECO 201. CATALOG DESCRIPTION Introduction to macroeconomic principles and analysis. Topics include the national income, the monetary system, inflation, business cycles, fiscal policy, the national debt, exchange rates, balance of payments, and economic growth. LEARNING OBJECTIVES Students who successfully complete ECO 202 will be able to: 1. Identify the measurement of macroeconomic data as: nominal and real GDP; price indices such as the CPI and the GDP price deflator; the rate of economic growth and inflation; and the unemployment and employment rate. 2. Define a federal budget deficit and a federal tax surplus and describe how each affect the federal government national debt. 3. Graph actual real GDP (the business cycle) and potential real GDP (long-term economic growth) and explain the stages of the business cycle in terms of the rate of economic growth, inflation and the unemployment rate. 4. Graph the effect of various macroeconomic factors that shift the aggregate demand (AD) schedule and analyze the effect using the output market. 5. Describe the role of savings and investment in terms of the rate of long-term economic growth, especially for developing countries. 6. Illustrate the economy in a state of recession or inflation using the output market diagram and explain policy variables that will correct the problem of recession or inflationary pressure. 7. Understand the role of the Treasury in the implementation of fiscal policy and the effect on interest rates in the economy. PAGE 1

2 8. Recognize the role of the Federal Reserve in the implementation of monetary policy and analyze the effect on interest rates and inflation rates. 9. Define the federal funds rate, the discount rate and the prime rate, and the workings of the banking system in the creation of money. READINGS & OTHER RESOURCES Required readings for this course are taken from the textbook: Goodwin, N., Nelson, J. A., Harris, J. (2009). Macroeconomics in Context. Armonk, N. Y.: M. E. Sharpe (ISBN ). A copy of the textbook has been put on 2-hour reserve in Jackson Library. Additional material necessary to successfully complete the course is located on the course Blackboard website. To access that site, go to and log in. Note that you must be registered for the course in order to have access to the course s Blackboard site. CONDUCT OF THE COURSE Because of the introductory nature of this course and the large size of the class, this course is based on a series of lectures. Students are encouraged to read all assigned material before class, and to bring to class a copy of that day s PowerPoint slides to facilitate note taking. Students are also encouraged to raise questions during class; if there is insufficient time to answer particular questions or the student wishes to talk in more detail, students will be encouraged to meet with the instructor outside of class. Numerous homework sets are assigned to give students the opportunity to practice applying their knowledge and identify problem areas as they go through the course. Finally, this course continually builds on what has come before. As a result, each of the three examinations will be cumulative. To aid in the learning process, grades will be posted on the course Blackboard site so that students have current information about their grades and where they place relative to other students. Answer keys for examinations and homework sets will also be posted on the course Blackboard site to provide additional feedback on student understanding. FACULTY AND STUDENT GUIDELINES The Bryan School Faculty Assembly and the Bryan School Student Advisory Council have adopted a set of Faculty and Student Guidelines to define expected behavior for both faculty and student. For more information, consult the following links: academicintegrity.uncg.edu/complete/ EVALUATION & GRADING The course grade is based on a weighted average of student performance on 3 cumulative examinations and 11 on-line homework sets. Initial weights on those items are: Homework average (lowest grade dropped)... 10% First Examination... 15% Second Examination... 30% Final Examination... 45% If an earlier examination grade is lower than a later examination grade, that earlier examination grade will be dropped and the weight on that dropped examination added to the later examination. If the first examination grade is lower than both later examinations, then the first examination PAGE 2

3 grade will be dropped and the weight of that examination added to which ever later examination has the higher grade. All grades will be expressed on a 100 point scale with each grade (A, B, C, D, and F) comprising a ten point range. For the course letter grade, plusses will be awarded for those course averages that are in the top 1/3 of the letter grade range; minuses will be awarded for those course averages that are in the bottom 1/3 of the letter grade range. Finally, all calculations will be carried out to two decimal places, and there will be no rounding of grade averages beyond what is implied by carrying out the calculations to two decimal places. Thus, for example, a course average between and (inclusive) will result in a course letter grade of B, a course average between and (inclusive) will result in a course letter grade of B, and a course average between and (inclusive) will result in a course letter grade of B+. Finally, because the lowest homework set grade is dropped and because earlier mid-term examination grades are dropped if later examination grades are higher, there are no make-up homework sets and no make-up examinations. The only exceptions to this policy are: Students with three final examinations within a 24-hour period may apply to the University Registrar's Office for permission to change their examination schedules. All requests for changes in examinations must be filed with the University Registrar's Office by 5:00 pm on Reading Day. Students who, due to extreme circumstances that are beyond their control, cannot take the final examination at the scheduled time and date may petition to have the final examination rescheduled. In such circumstances, students should contact the instructor as soon as possible and provide tangible evidence to support the claim that there is a conflict that is due to extreme circumstances that are beyond their control. Examples of situations that are generally not justifications for rescheduling the final examination include conflicts with other courses that do not follow the prescribed final examination schedule, conflicts with work schedules, and conflicts with end-of-semester travel arrangements. TOPICAL OUTLINE & CALENDAR The calendar below provides an outline of the topics that will be covered in this course along with the associated readings. In addition, this calendar includes the dates of the three cumulative examinations and the due dates for the on-line homework sets. Please note that if the University cancels class the day of: the first or second examination, the examination will take place at the next class meeting time. the class before the first or second examination is scheduled, the examination will be moved forward one class. the final examination, check the course Blackboard site for information about rescheduling. INTRODUCTION INTRODUCTION TO THE COURSE...August 24 Readings: Course Blackboard site and Syllabus Video: Dan Ariely, How an Injury Led Me to Irrationailty, Predictably Irrational. PAGE 3

4 THE CONTEXT OF ECONOMIC ACTIVITY INTRODUCTION TO MACROECONOMICS...August 26, 28 Readings: Chapter 1 Video: Dan Ariely, The Effect of Expectations, Predictably Irrational. CHAPTER 1 ON-LINE HOMEWORK SET (Due: August 31, 11:45 pm) BASIC TOOLS AND CONCEPTS...August 31; September 2, 4 Readings: Chapter 2 Video: Dan Ariely, The Effect of Expectations, Predictably Irrational. Video: Dan Ariely, The Power of Price, Predictably Irrational. CHAPTER 2 ON-LINE HOMEWORK SET (Due: September 9, 11:45 pm) WHAT ECONOMIES DO...September 9, 11 Readings: Chapter 3 Video: Dan Ariely, The Truth about Relativity, Predictably Irrational. Audio: Michael Sandel, Markets and Morals, First Reith Lecture, BBC4, 2009 CHAPTER 3 ON-LINE HOMEWORK SET (Due: September 14, 11:45 pm) SUPPLY AND DEMAND...September 14, 16, 18, 21 Readings: Chapter 4 CHAPTER 4 ON-LINE HOMEWORK SET (Due: September 21, 11:45 pm) FIRST CUMULATIVE EXAMINATION...September 23 MACROECONOMIC BASICS MACROECONOMIC MEASUREMENT...September 25, 28, 30; October 2, 5, 7 Readings: Chapter 5 CHAPTER 5 ON-LINE HOMEWORK SET (Due: October 9, 11:45 pm) EMPLOYMENT AND UNEMPLOYMENT...October 9, 14, 16, 19 Readings: Chapter 7 Dan Ariely, The High Price of Ownership, Predictably Irrational. CHAPTER 7 ON-LINE HOMEWORK SET (Due: October 21, 11:45 pm) MACROECONOMIC THEORY AND POLICY AGGREGATE DEMAND AND ECONOMIC FLUCTUATIONS...October 21, 23, 26, 28, 30 Readings: Chapter 9 CHAPTER 9 ON-LINE HOMEWORK SET (Due: October 30, 11:45 pm) SECOND CUMULATIVE EXAMINATION...November 2 PAGE 4

5 FISCAL POLICY AND THE INTERNATIONAL SECTOR...November 4, 6 Readings: Chapter 10 CHAPTER 10 ON-LINE HOMEWORK SET (Due: November 9, 11:45 pm) MONEY AND MONETARY POLICY...November 9, 11, 13 Readings: Chapter 11: Sections 1, 4, and 5 CHAPTER 11 ON-LINE HOMEWORK SET (Due: November 16, 11:45 pm) AGGREGATE SUPPLY, AGGREGATE DEMAND, AND INFLATION...November 16, 18, 20, 23, 30 Readings: Chapter 12 CHAPTER 12 ON-LINE HOMEWORK SET (Due: December 2, 11:45 pm) HOW ECONOMIES GROW AND DEVELOP...December 2, 4 Readings: Chapter 14: Sections 1, 2, and 3 CHAPTER 14 ON-LINE HOMEWORK SET (Due: December 7, 11:45 pm) FINAL THOUGHTS...December 7 FINAL CUMULATIVE EXAMINATION...Monday December 14 th, 8:00 am - 11:00 am PAGE 5