E202 Introduction to Macroeconomics Fall 2014

Transcription

1 E202 Introduction to Macroeconomics Fall 2014 Instructor Contact: Instructor: Ivan Lopez Cruz Office: Wylie Hall 244 Office Hours: Friday 10AM-13AM & by appt. Class Website: Oncourse Class Information: Course: E202 class number Location: Wylie Hall (WY) 005 Time: Mo-We 5:45PM - 7:00PM Textbook: Mankiw, Principles of Macroeconomics 7 th edition. Course Description: This course is designed to introduce you to the language of macroeconomics. Knowing some vocabulary in order to discuss economic issues is only part of what will be learned in this course. The main goal is to provide you with an analytical tool box that should allow you to get involved in the fundamental issues of the economy as a whole. Concepts like inflation, unemployment, output growth, and the relationship of your country to the rest of the world, are topics that every educated person should understand. Ignoring basic economics is very costly to any individual living in a market-based economy like ours, since knowing how the system works implies important advantages. Course Objectives: In this course we will address questions like: Who makes the decisions that govern how much you pay in taxes? Who makes the decisions about how much interest you pay on your home, car or credit card loans? By the time we get to the end of this course, you will have an understanding of the answers to these and other important questions about the economy. This course provides an overview of the principles of macroeconomics. It will describe the economic factors that can lead to a better standard of living and explain the causes of recession, unemployment and inflation. We will examine how policy choices can provide remedies to these problems. We will also examine the interdependence and the role of the United States in the world economy. Econ 202 provides a learning experience based on the development of analytical skills for understanding the macroeconomic environment.

2 Attendance For most people attendance will be critical in order to understand the material, though I will not penalize you for missing a class. Please remember that Economics is learned by doing and frequently you will learn better if you see how others approach the subject before you try it yourself. If you miss a lecture, please do not expect me to repeat the material at another time (such as office hours). I recommend that you borrow notes from another student. My personal notes are not available for copying. Supplemental Instruction (SI) SI is a proactive academic assistance program funded and managed by the Student Academic Center. It provides a time for students to come together to work collaboratively to strengthen the independent learning and cognitive skills they need to master the E201 course content. Participation in SI is not mandatory but strongly recommended. Full participation can count up to 5% of your final exam grade. If you choose not to be involved in SI, your final exam carries an extra 5% weight. One undocumented absence is allowed. However, any further undocumented absences will decrease the weight reduced from the final exam. Two undocumented absence: Weight given to the final will be reduced by 4% Three undocumented absences: Weight given to the final will be reduced by 3% Any undocumented absences over three will result in no benefit from SI Full participation in SI includes attending all sessions, being actively engaged and completing all the required work. I f you decide not to participate in SI, your grade will be determined as stated above. SI times will be announced during the first week of classes. Practice Like any other rigorous discipline, you will learn economics by being in constant contact with it. So doing homework is going to be very important if you want to master the tools that we will learn. I will provide four problems sets, and they are going to be collected in class. Late homework will not be graded and will get a grade of zero. No make-ups are provided for homework. The missed homework points, due to an approved absence, will be considered when calculating your final grade Homework assignments are worth 10% course grade.

3 Academic Misconduct and expectations on class decorum Refer to the Code of Student Rights, Responsibilities and Conduct to clarify any doubt on what constitutes academic misconduct. Common courtesy and standards of professional conduct require that you arrive promptly for class, remain attentive for the entire class period and avoid any disruptive behavior. Questions are always welcomed. Please mind that dishonesty of any kind is not tolerated in this course. Dishonesty includes, but is not limited to, cheating, plagiarizing, fabricating information or citations, facilitating acts of academic dishonesty by others, having unauthorized possession of examinations, submitting work of another person or work previously used without informing the instructor, or tampering with academic work of other students. Students who are found dishonest will receive the most severe academic sanction consistent with IU polices. A minimum penalty for any breach of academic integrity is the grade of F for the course. The University of Indiana has information at its website: Be sure to read the contents of this site. Withdrawal The last day to withdraw from the class and receive an automatic W is Wednesday, March 12. This is also the last day to get a withdrawal slip signed without a special petition. After this date, you can obtain a late withdrawal from a course only by first receiving special permission from the dean of the college. Such permission is VERY difficult to get. University rules specify that permission for late withdrawals is given only for urgent reasons relating to extended illness or equivalent distress to a student who is passing the course on the date of withdrawal. University calendar: You can find information about the university calendar (including holidays, and last day for withdrawal) on webpage Exams Exams provide an incentive for you to learn and allow me to collect data to evaluate your performance. Because of the size of this class, exam questions will be mostly multiple-choice format. Basic calculators are optional but graphing calculators or cell phones are not permitted during exams. I will compute your final grades by means of three in-class exams, a comprehensive final exam, and homework weighted as follows:

4 MID-TERM 1 Wednesday, February 12 20% of your final grade MID-TERM 2 Monday, March 24 20% of your final grade MID-TERM 3 Wednesday, April 16 20% of your final grade FINAL EXAM 8:00-10:00 a.m., Mon., May 5 30% of your final grade (25% if you decide to participate in SI) The final exam will have a departmental and a sectional part, each one of them is worth 15% for 30% in total Homework 10% of your final grade. Your schedule must permit you to be free to take the final exam on Monday, May 5, 2014, from 8:00 a.m. to 10:00 a.m. There are no alternatives to taking the exam at this time and date. If you are enrolled in two or more of the following courses you have a conflict BUS-A 310, A 312 ECON-E 202, MATH-M 212, T 101, V 118 Drop all but one of these conflicting courses now, unless you can resolve the conflict with your instructor(s) in the other course(s). Please do not ask if you may have an alternative time for the Economics E202 final you will not be granted this request. Consult the final exam schedule to avoid additional conflicts. If you desire classroom/testing accommodations for a disability, contact your instructor outside of class to present the written supporting memorandum of accommodation from the Office of Disability Services for Students ( Requests for accommodations for disability must be received and authorized by your instructor in written form no less than two weeks in advance of need, in order to allow adequate time to review and make appropriate arrangements. No accommodation should be assumed until authorized by your instructor. There are no make-up exams. If you have a legitimate excuse for missing an exam, the weight of your final exam will be increased enough to make up the missed credit. Excuses should be obtained in advance of scheduled exams whenever possible. More than one excused absence from an exam is not possible. If you miss an exam without obtaining an excuse, your score will be zero and this will be averaged with your other scores. No excused absence--other than documented hospitalization or equivalent distress--is possible for the final exam.

5 Grading Scale I will compute your final grade based on the next table. The final grade for the course is based upon the percentage of the number of adjusted total points earned. There is no grading curve but the following scale. Max Points % of the Total Grade Points Percentage Mid Term A Mid Term A Mid Term A Homework B Final B Total 500 B C C C D D D F or less Tentative course outline: Please note that this is a tentative outline. My goal is to proceed at an optimal pace: slow enough that important concepts are thoroughly learned, yet fast enough that the course does not drag. Consequently, this outline is subject to possible changes. Any changes will be announced in class. I. Introduction A. Basic macro framework Jan. 13 What is Macroeconomics Macroeconomic Concepts B. Modelling the Macroeconomy (Ch. 2) Jan. 15 Models Production Possibilities Frontier Positive vs. Normative Circular Flow Model

6 THE DATA OF MACROECONOMICS II. Measuring The Economy s Output and Income (Ch. 10) A. The Economy s Income and Expenditure Jan. 22 B. The Measurement of Gross Domestic Product C. The Components of GDP D. Real versus Nominal GDP Jan. 27 III. Measuring the Cost of Living (Ch. 11) A. The Consumer Price Index Jan. 29 B. Correcting economic data for the effects of inflation Feb. 3 THE REAL ECONOMY IN THE LONG RUN IV. Production and Growth (Ch.12) Feb. 5 A. Productivity B. Economic Growth and Public Policy Feb. 10 EXAM 1 Feb. 12 V. Saving Investment and the Financial System (Ch. 13) Feb. 17 A. Financial institutions in the U.S. Economy B. Saving and investment in the National Income Accounts C. The market for loanable funds VI. The Basic Tools of Finance (Ch.14) Feb. 19 A. Present Value B. Managing Risk C. Asset Valuation VII. Unemployment (Ch. 15) A. Measurement of unemployment Feb. 24 B. Types of unemployment C. Natural rate of unemployment Feb. 26 D. Causes of unemployment : Minimum-wage laws Unions Efficiency wages Job search

7 MONEY AND PRICES IN THE LONG RUN VIII. The Monetary System (Ch. 16) A. The meaning of Money Mar. 3 B. The Federal Reserve System C. Banks and the Money Supply Mar. 5 D. The Fed s tools of Monetary Control IX. Inflation (Ch. 17) A. Cost of Inflation Mar. 10 B. Hyperinflation C. Causes of Inflation in the long run Mar. 12 D. Velocity and the Quantity Equation EXAM 2 Mar. 24 SHORT RUN ECONOMIC FLUCTUATIONS X. Aggregate Supply and Aggregate Demand (Ch. 20) A. Key facts about economic fluctuations Mar. 26 B. Short Run vs. Long Run Macro perspective C. Aggregate Supply Mar. 31 D. Slope of the AS curve E. Shifters of the AS curve XI. Monetary Policy (Ch. 21) A. Liquidity Preference Theory Abr. 2 B. Money, interest rates and Aggregate Demand XII. Fiscal Policy (Ch. 21) A. Government purchases Abr. 7 B. The spending multiplier C. Crowding out D. Automatic stabilizers XIII. The Short Run trade-off between Inflation and Unemployment (Ch. 22) A. The Phillips Curve Abr. 9 B. Shifts in the Phillips Curve: The Role of Expectations C. Shifts in the Phillips Curve: The Role of Supply Shocks Abr. 14 D. The Cost of Reducing Inflation

8 EXAM 3 Abr. 16 THE MACROECONOMICS OF OPEN ECONOMIES XIV. Open-Economy Macroeconomics (Ch. 18) Abr. 21 A. International flows of goods and capital B. Prices for international transactions: exchange rates Abr. 23 C. Purchasing power parity XV. Open-Economy Macro Theory (Ch. 19) A. Supply and demand for loanable funds and for foreign-currency exchange Abr. 28 B. Equilibrium in the open economy C. How Policies and Events Affect an Open Economy Abr. 30 XVI. Debates over macroeconomic Policy (Ch. 23) A. Should Monetary and Fiscal Policymakers Try to Stabilize the Economy? Abr. 30 B. Should the Government Fight Recessions with Spending? C. Should Monetary Policy Be Made by Rule Rather Than by Discretion? FINAL EXAM: Monday, May 5, 2014, from 8:00 a.m. to 10:00 a.m.