ECO11 Introduction to Macroeconomics, Fall 2012
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1 Economics Department, LIU Post ECO11 Introduction to Macroeconomics, Fall 2012 Section 1, Mondays and Wednesdays 11:00 am 12:20 pm, Humanities HM128 Section 6, Mondays and Wednesdays 3:30 pm 4:50 pm, Kahn Discovery Center KA212 Instructor: Udayan Roy Course s Description (from the Undergraduate Bulletin ): This course discusses the important economic theories and concepts that facilitate understanding economic events and questions. Its main focus is on analyzing the behavior of important economic aggregates such as national income, unemployment, inflation, interest rates, exchange rates, and economics growth. The effects of the government s monetary and fiscal policies on economic growth and inflation are also examined. Course Credits: This is a 3-credit course. The New York State Education Department (NYSED) requires that for each credit hour there shall be at least 15 hours of instruction (of 50 minutes each) and at least 30 hours of supplementary assignments. Therefore, a 3-credit course shall meet for a minimum of 45 hours, each hour being 50 minutes, for a total of 2,250 minutes and require at least 90 hours of supplementary assignments and readings outside of the lecture. You should expect to spend at least 45 hours on reading (3 hours a week) and 45 hours on homework assignments (3 hours a week). Therefore, overall, you should expect to spend 135 hours on this course. Prerequisites: There are no formal prerequisites for this course. Very basic algebra skills are assumed. An ability to use graphs to represent links between variables would be helpful. The appendix to Chapter 2 of the course s textbook provides a good review of graphing concepts. Course s Goals: This course is one of the two economics courses in LIU Post s Core Curriculum. According to the statement of the Core Curriculum s goals in LIU Post s Undergraduate Bulletin for , The Core Curriculum will: 1. Foster the continued development of critical and analytical skills 2. Increase the understanding and appreciation of areas of human knowledge 3. Develop an understanding of diverse modes of inquiry 4. Promote understanding of ethical and moral issues 5. Increase the ability to examine problems and issues from multiple perspectives 6. Develop the capacity to conduct independent research 7. Foster a capacity for lifelong learning. Goals 1-3 and 5 are within the ambitions of this course. Specifically, I expect that in this course:
2 1. Students will acquire an understanding and applied knowledge of some of the core concepts and analytical tools of economic theory. They will be able to apply and evaluate the core concepts of economics such as the theory of supply and demand to everyday life and national policy. 2. Students will acquire an understanding of the main measures of macroeconomic performance. They will be able to explain the calculation of the basic macroeconomic measures such as GDP, inflation, unemployment, money supply. They will also be able to explain the usefulness and limitations of these macroeconomics measures. 3. Students will acquire the ability to utilize macroeconomic theory to analyze and evaluate macroeconomic policy. Students should be able to identify the tools of fiscal policy and explain their likely impact on the economy. Similarly, students should be able to identify the tools of monetary policy and explain their impact on the economy. After spending the first two weeks on the basics of economics including the supply-demand theory of how a market-based economy works we will begin our study of macroeconomics. Macroeconomics is typically the study of the behavior of economic variables that describe an entire economy. (Examples of such macroeconomic variables include the unemployment rate of Angola, the inflation rate of Brazil, the total income of Canada, etc.). Our study of macroeconomics will consist of three broad parts. First, we will study how statisticians measure important macroeconomic variables such as the total output of the economy, the unemployment rate, and the price level. Second, we will look at macroeconomic theories that attempt to explain the historical data. Finally, we will look at macroeconomic policy making. Chiefly, we will look at what a country s government and its central bank can do to stabilize an economy that is going through a rough patch. Notice that our approach to the economy resembles the approach of a doctor to a patient. The first thing a doctor does is to take the patient s pulse. This resembles an economist s measurement of the health of an economy. Next, the doctor tries to make a diagnosis of the patient s situation. For this purpose the doctor will use a theory of how the human body works. Similarly, economists use a theory of how the economy works in order to make a diagnosis of the state of the economy. The last step for a doctor is to recommend a treatment. Similarly, economists try to recommend the best policy for a given economy. Course s Required Textbook: Brief Principles of Macroeconomics, Sixth Edition, by N. Gregory Mankiw, South-Western Cengage Learning, Mason, Ohio, 2011, ISBN (Note: either Principles of Macroeconomics, Sixth Edition, by N. Gregory Mankiw, South-Western Cengage Learning, Mason, Ohio, 2011, ISBN or Principles of Economics, Sixth Edition, by N. Gregory Mankiw, South-Western Cengage Learning, Mason, Ohio, 2011, ISBN , would be a perfectly good substitute. The fifth or even the fourth editions of either of the above three books would do very well too.) A copy of the textbook book will be kept on reserve for you at the library s 2
3 circulation desk throughout the semester. Recommended Study Guide: Study Guide for Mankiw s "Brief Principles of Macroeconomics" by David R. Hakes, South-Western Cengage Learning, Mason, Ohio, 2011, ISBN: This study guide is recommended but not required. A copy of the study guide will be kept on reserve for you at the library s circulation desk throughout the semester Examinations and Grading: Your grade will be based on your performance in the Midterm, the Final, some in-class quizzes, and some homework assignments. In preparing the course grade I will use the following weights: 30% for the Final, 30% for the Midterm, 20% for the quizzes, and 20% for the homework assignments. Using these weights, I will calculate each student s overall percentage score. The overall percentage scores will then be scaled according to the procedure shown in the table below to yield each student s letter grade. You are guaranteed the grade if your overall percentage is in the range or you are in the A Top decile (tenth) A th decile B th decile B th decile B th decile C th decile C th decile C rd decile D nd decile This is a rough guide to my grading procedure. I will use my discretion when this procedure gives an ambiguous result (as, for example, when too many students get the exact same percentage score). But when the above procedure gives an unambiguous grade, I will abide by it. Midterm: The Midterm will be held on Monday, October 22. It will consist of multiple-choice and fill-inthe-blanks questions on the material taught prior to the day of the test. Final: The Final will be held during Finals Week (on either December 17 or December 19). The Final will be cumulative: that is, it will be based on all material taught in the course. However, most of my questions will be based on the material not tested in the Midterm. In-Class Quizzes: I will give approximately six short in-class quizzes with adequate notice throughout the semester. I will count only your four highest quiz scores and these will have a collective weight of 20% in your course grade, as I said earlier. Blackboard Homework Assignments: The homework assignments will consist of computer-graded online quizzes within the Blackboard course management system. You will have to log on at and then go to the Blackboard page for this course to find and complete the online homework assignments. Use the firstname.lastname format as your username. The Blackboard password is the same as your My.LIU password; see for further details. 3
4 If you do not have a My.LIU password, please go to for further instructions. If you are still unable to log on to Blackboard, please contact the Office of Information Technology. You could them at blackboard@cwpost.liu.edu or call them at or go to their offices on the main floor of the Library building. In general, for all technology-related issues, please take a look at the Center for Student Information web site Specifically, please see for tutorials on the use of Blackboard. Attendance Policy: The best possible grade (BPG) that you could get will depend on the number of your absences. See the accompanying table for details. You will be marked absent if you are late for a lecture by ten minutes or more or if you leave early or if you are not attentive in class. Absences 6, 7 B+ 8, 9 B 10, 11 B- 12, 13 C+ 14+ D No make-up tests will be given for the Midterm or the Final unless there are compelling medical reasons supported by a valid doctor s note. In case you cannot take a test at the scheduled time, you (or someone representing you) must inform me of the reason(s) not later than twenty-four hours after the test. Ideally, I should be told before the test. The reason(s) you give for missing a test will affect my decision on whether or not you should get a make-up test but it will not affect your BPG. No make-ups will be given for the quizzes. Homework assignments completed late will not count. General Classroom Decorum: Students must make sure that their actions have no adverse effects on the ability of other students to learn and do their work. Students must behave honorably when taking quizzes and tests and report dishonorable behavior to the instructor when they see such behavior. When in the classroom, students must not engage in any activity that is not directly part of the course. Students with Disabilities: The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that provides comprehensive civil rights protection for person with disabilities Students with special needs as addressed by the ADA who need assistance should contact The Learning Support Center, located in the lower level of Post Hall ( ), immediately. Please meet with me early in the semester if you require accommodations. I will make reasonable efforts to accommodate your special needs. For more information, please visit The Learning Support Center at The Learning Support Center provides a full range of support services, educational strategies, and opportunities to help student achieve their personal, academic and vocational goals. Course Calendar: The following is a tentative schedule for the course. I will do my best to stick to it. Nevertheless, I expect to stray from this schedule on a regular basis. BPG 4
5 Lecture Date Day Fall Sep W Introduction 2 10-Sep M Ch 2 Thinking Like an Economist 3 12-Sep W Ch 4 The Market Forces of Supply and Demand 4 17-Sep M Ch 4, End of Add/Drop and Late Registration on 9/ Sep W Ch 5 Measuring a Nation's Income 6 24-Sep M Ch Sep W Ch 6 Measuring the Cost of Living 8 1-Oct M Ch Oct W Ch 8 Saving, Investment, and the Financial System, Columbus Day, no classes on Oct Oct W Ch Oct M Ch 10 Unemployment and Its Natural Rate, Registration Begins for Spring Oct W Ch 10, Review for Midterm Oct M Midterm (tentative, Chs. 2, 4 6, 8, 10) Oct W Ch 11 The Monetary System Oct M Ch Oct W Ch 12 Money Growth and Inflation 17 5-Nov M Ch Nov W Ch 15 Aggregate Demand and Aggregate Supply. Last Day to Opt P/F or Withdraw is Nov Nov M Ch Nov W Ch 16 The Influence of Monetary and Fiscal Policy on Aggregate Demand Nov M Ch 16, Thanksgiving, no classes, Nov Nov M Ch 18 Six Debates over Macroeconomic Policy Nov W Ch Dec M Ch 13 Open-Economy Macroeconomics: Basic Concepts 25 5-Dec W Ch Dec M Ch 14 A Macroeconomic Theory of the Open Economy Last lecture 12-Dec W Study Day/Snow Day/Alternate Class Day 17-Dec M Final 19-Dec W Final Contact Information: My office is at Room 206, Hoxie Hall (across from the Bookstore). My office phone number is (516) /2321. My address is uroy@liu.edu. My own Web site is at My mailing address is: Udayan Roy, Economics Department, Long Island University, Brookville, NY
6 Office Hours: My office hours are: 12:30 pm 2:00 pm and 5:00 pm 5:30 pm on Mondays and Wednesdays. For any other hours, a prior appointment will be necessary. Please stop by whenever you need any help with your coursework. Web Sites: The course's Web site is at The Web site for this course's textbook is at w &Ntk=all P_Isbn13&N=+16. It has a lot of material that might be of use to you. Have a great semester! 6
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