Principles of Macroeconomics, spring 2015 Economics 111.03 Professor: Thomas Bishop Office: Sage Hall 2153 Phone: 805.437.3780 E-mail: thomas.bishop@csuci.edu Office hours: Tuesday, Thursday 2:30-5:00, or by appointment Class time, location: Tuesday, Thursday 10:30-11:45, Del Norte 1530 Course website: Required text: CI Learn from http://myci.csuci.edu/ (This site has lecture notes, answers to homework questions and exams and other materials.) Macroeconomics by R Glenn Hubbard and Anthony Patrick O Brien (5 th edition, Pearson, ISBN: 978-0-13-345549-6). Grading system Your grade for the course is based on homework and exams in the following way: Task Percent of grade Homework assignments 30 Midterm exam 35 Final exam 35 Grades assigned to final scores calculated from the homework and exams will be allocated according to the following distribution: 90%-100%: A+, A, A- 80%-89%: B+, B, B- 70%-79%: C+, C, C- 60%-69%: D+, D, D- I might also adjust the scores to account for the difficulty of the course. For example, if few people get a final score above 90%, then I will give out more As to account for difficultly of the course. In this case, I can allocate about 20%-25% As and 50%-60% As and Bs. Exams There will be no make-up exams, so if you can not attend class on the day of the exams or you can not attend the final exam, please do not enroll in this course for a grade. You are welcome to take the course for a pass-fail grade. You may not have a job interview during an exam and take a make-up exam later! The mid-term exam will cover all material up to that date. The final exam will concentrate on material after the mid-term exam, but will also include some earlier exam questions. Both exams will include multiple choice questions focused on the lecture slides, textbook and homework (also taken from the textbook) and possibly a few questions requiring written answers.
Homework Late homework will not be accepted. If you can not finish in time, hand in what you have completed for partial credit. I do this out of fairness for your fellow students. If you know that you will be out of town or otherwise unavailable when the assignment is due, you must submit it early. Please turn in your assignments at class time by the end of class time on the due date. Homework questions are listed in the textbook or from websites, as indicated on the schedule below. Homework assignments are generally completed in teams. I will initially assign teams, but you are free to make your own team or to do the assignments by yourself. Teams should generally have 3-5 students, and work should be allocated equally. A team submits only one copy of answers, and all team members receive the same grade for the assignment. When you turn in your homework assignment, write the names of each team member in the upper right corner of the first page, so that credit can be given to each member. Answers to the homework problems will be posted on the website after the due date. You are expected to read the answers to the homework assignments by yourself, since I will not generally cover homework assignments in lecture. Class participation Regular class participation can help your grade if you are on the borderline between two grades. For example, if you receive the highest B+, regular class participation would boost your grade to an A-. Course overview This course considers general concepts that are important in macroeconomic theory and policy: the meaning and measurement of the value of income from production, the measurement of prices of goods and services and inflation, the causes of inflation and deflation, the meaning and the measurement of unemployment, the causes of wealth or growth in production, the role of saving and investing for the future, the effect that money and credit have in the economy, how monetary and fiscal policies affect spending, production, prices and employment over time, currency exchange rates and international finance, the accounting of imports, exports and other international economic data. The course is a mix of theory and applications of theory to real policies and issues. The theory is intended to give you a methodical way to think about important issues in economics (and in real life) and to simplify them so that they are more comprehensible. Program Learning Goals: Skills that I aim to convey and to teach in the course include critical thinking and analysis of macroeconomic issues oral communication through questions and answers in class written communication through written homework assignments collaboration through homework assignments ethical conduct: no cheating on exams, but cooperation/collaboration for homework is encouraged. competency in macroeconomics to prepare you for a job at a financial institution and to prepare you to understand personal economics (see course learning outcomes) Course Learning Outcomes: At the end of this course, good students will be able to calculate the value of production, sales and income for the whole economy to explain how to calculate the inflation rate of the prices of goods and services
to understand the factors that affect the growth in production of goods and services over decades to understand how domestic (national) saving is related to domestic investment expenditure to understand basic principles of finance to calculate the unemployment rate and to understand factors that cause unemployment to understand the functions of money and the basics of the financial system to explain the goals of monetary policy to understand basic facts of the international economy and how they are related to domestic saving and investment expenditure to explain how monetary and fiscal policies affect expenditure on goods and service on a quarterly or annual basis Advice on studying Create your own notebook: print the lecture notes before lecture and write on them during lecture. You will get more value out of your tuition dollars if you read the assigned material before it is covered in class. Treat academics as you might athletics: pace yourself throughout the semester, rather than cram before exams. Try to stay healthy and maintain a healthy sleep regimen: the course will be much more enjoyable and you will probably learn more. The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, which helps its possessor to draw correct conclusions. --John Maynard Keynes Date Lecture topic Assigned reading Homework assignment 1.26 Introduction, gross domestic Chapter 8 production, income and expenditure 1.28 Measurement of gross Chapter 8 domestic production, income and expenditure 2.2 Measurement of gross Chapter 8 domestic production, income and expenditure 2.4 Uses and interpretations of Chapter 8 gross domestic production, income and expenditure 2.9 Prices, inflation and deflation Chapter 9 2.11 Prices, inflation and deflation Chapter 9 Chapter 8 problems and applications due: 1.13, 2.1, 3.4, D.82 2.16 Unemployment and the labor Chapter 9 market 2.18 Unemployment and the labor Chapter 9 market 2.23 Economic growth and Chapter 10 productivity 2.25 Saving, investment and financial institutions, the market for loanable funds Chapter 10 Chapter 9 problems and applications due: 1.7, 1.8, 2.3, 4.9, Go to http://data.bls.gov/cgi-bin/dsrv?cu to download the annual % change for the (all items) CPI and its major categories for Los Angeles-Riverside-Orange County,
3.1 Saving, investment and financial institutions, the market for loanable funds 3.3 Long run economic growth and factors of production 3.8 Diminishing marginal productivity and positive externalities Chapter 10 Chapter 11 Chapter 11 CA during the last 15 years. During the latest month, which category has grown most rapidly? Create a graph of the (all items) CPI for the last 15 years. During the last 10 years, when did the (all items) CPI decrease? Chapter 10 problems and applications due: 2.5, 2.6, 2.10, 2.17 Go to http://databank.worldbank.org/data/ to download data for gross capital formation (% of GDP), gross domestic savings (% of GDP) and gross savings (% of GDP) for the US, Japan, Germany and Brazil. Create a graph of the 3 variables for each country from the earliest year to the latest year. Is the relationship between gross capital formation and domestic savings positive or negative? What is the difference between gross domestic savings and gross savings? 3.10 Population growth Chapter 11 3.15 Review Chapter 11 problems and applications due: 4.5, 4.11, 5.7 Go to http://databank.worldbank.org/data/ to download GDP per capita (person) in 2000 US$, GDP per capita growth, life expectancy at birth, gross fixed capital formation (% of GDP), immunization of DPT and school enrollment secondary (% gross) for the Australia, Brazil, India and Cambodia. Create a graph of the 6 variables for each country from the earliest year to the latest year. (Some years do not have data.) Describe how these variables have changed and which countries currently have the highest and the lowest values. 3.17 Midterm Exam 3.29 Aggregate expenditure and 4.5 Aggregate expenditure and 4.7 Aggregate expenditure and 4.12 Money, credit and the banking system 4.14 Money, credit and the banking system Chapter 14 Chapter 14 problems and applications due: 1.7, 2.10, 3.10, 4.6
4.19 The banking system and the Chapter 14 central bank 4.21 Money and prices Chapter 14 4.26 Balance of payments, Chapter 18 aggregate demand, aggregate supply 4.28 Balance of payments, aggregate demand, aggregate supply Chapter 18 5.3 Foreign exchange market and Chapter 18 exchange rates 5.5 The effects of fiscal policy on Chapter 16 production and prices 5.10 Government purchases and tax Chapter 16 multipliers; deficits and debts 5.12 Government purchases and tax Chapter 16 multipliers; deficits and debts 5.19 Final exam (at 08:00) Chapter 14 problems and applications due: 1.10, 2.4, 3.10, 4.9 Chapter 18 problems and applications due: 2.5, 2.10, D18.2, D18.4, D18.5.