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Syllabus –Fall 2009
Principles of Macroeconomics, Ecn. 120
Tuesday, Thursday
Section C: 2:30 pm – 3:55 pmSection D: 11:20 am – 12:45 pm
Instructor / Todd Easton / Office Hours
Office Phone / 503-943-7209 / MONDAY: / 2:30 – 3:30 pm
Home Phone / 503-234-2453 / WEDNESDAY: / 9:30 – 11:00 am
Fax / 503-943-8041 / 2:30 – 3:30 pm
Email / / THURSDAY: / 9:00 – 10:00 am
Website: / teaching.up.edu/ECN120 / FRIDAY: / 9:00 – 10:00 am
Office No. / Franz 312 / OR by appointment!
Course Prerequisite: none
Course Description
Formal: Investigates the determinants of national output, the unemployment rate, and inflation, as well as the use of monetary and fiscal policies to regulate the economy. Also examines international trade and determinants of exchange rates.
Informal: This course, along with Ecn. 121, introduces you to economics. Economics is the social science that studies how economies work. Economies are the systems societies use to produce output and distribute output among their members.
Understanding economics is crucial. The economy of a society affects its members in fundamental ways. It affects their ability to provide for themselves and their families. It affects their ability to spend time with their children and volunteer. It affects their physical environment and their political attitudes. It affects the number of poor people, as well as the size of the gap between rich and poor. If you want to understand a society, understand its economy.
In particular, this course introduces you to a specific part of economics, macroeconomics. It aims to give you an excellent opportunity to gain a practical, up-to-date understanding of the forces that affect the health of the overall economy. For example, it introduces theories about what determines the level of total output and employment, as well as the rate of inflation. It investigates what determines how quickly living standards improve. It also examines the determinants of exports, imports, and the price of our currency in international trade.
University Core Questions to be addressed
How does the world work? How could the world work better?
How do relationships and communities function? What is the value of difference?
University Core Outcomes to be achieved
Learn to live and contribute in a diverse society and an interdependent world.
Learning Goals Addressed:
/ Communication Competencieseach student writes summaries of three macroeconomics articles
Quantitative Competencies -
Analytic and Decision Making Competencies
/ International Business Competencies
investigates forces affecting international trade and exchange rates
/ Ethics and Social Responsibility Competencies
examines unemployment as a social problem and the impacts of globalization, including how they differ between developed & developing worlds
Leadership, Team and Interpersonal Competencies
Business Knowledge Competencies
Course Objectives
By the end of the course, I aim for students to:
1) know the economic institutions and recent economic history taught in the course,
2) understand the economic concepts and theories taught,
3) apply these economic concepts and theories to new situations,
4) understand how race/ethnicity and levels of education influence differences in unemployment rates,
5) understand various perspectives on freeing trade between nations and other elements of globalization, including perspectives held by people outside the developed world,
6) interpret macroeconomic data,
7) kindle some personal interest in the economy, how it functions, or how it influences the lives of its citizens,
8) understand newspaper and magazine articles written on macroeconomics and be able to apply class material to interpret such articles, and
9) strive to question facts, assumptions, and reasoning of an author or lecturer.
Readings
Our text is:
Karl Case & Ray Fair, Principles of Economics, 8th edition, 2007
Additional readings will be put on reserve in the library or provided as links from the course web site. Most reading assignments are listed below in the class calendar. A few additional assignments will be made during the semester.
Course Requirements
Your course grade will be based on participation, on-line problem sets, team homework assignments, awritten assignment, and exams. Each of these class elements is described below. Following those descriptions, I explain how your final grade will be calculated.
Participation
I expect and encourage all students to participate—during class and/or in learning.up forums. Fabulous in-class participation would involve coming prepared; saying interesting things in response to reading, lecture, or other students’ comments; asking questions to clarify points I make or points made in the reading; correctly answering questions I pose; attending class regularly and punctually; and sharing relevant economic news. Fabulousforum participation would involve most of the same behaviors, except in writing. A student who attends regularly, seems prepared, and contributes thoughtfully on a regular basis, will receive an A for participation. On the other hand, a student who misses lots of classes and never participates will earn an F.
On-line problem sets
To help you master course material, and to reward the ongoing effort required for most students to do well, I require on-line problem sets. Thesewere created by economists working for Aplia, a company founded by a well-known economist at Stanford—Paul Romer. To access these problem sets, you pay $35 and register at econ.aplia.com. On the first day of class, I will email you an instruction sheet and a course key. After you receive them, please register within 24 hours.
After you register, you will be able to view the Aplia’s list of Current Assignments. Aplia problem sets come in pairs. The first member of a pair is an(optional) practice problem set to help you learn the relevant topic. Only your score on the second member of a pair (labeled “Graded” in the fourth column of the Course Outline) will count toward your course grade. The graded problem sets will be generally be due at 11:00 pm the day after we complete the relevant material in class.
Rely on your own resources, and me, to do each graded problem set. It is cheating to obtain answers from other students or to communicate answers to other students.
When I calculate your grade on Aplia problem sets, I will allow three “free passes.” That is, when I compute your grade at the end of the semester, I will first throw out your lowest three problem set scores. After that, I will calculate the average percentage correct for the remaining problem sets. Averaging 90% on those will earn you an “A”, 80% will earn you a “B,” 70 % a “C,” et cetera. I provide the free passes to take into account computer-related problems and to avoid being distracted by student requests for adjustments. Only in our dreams are computers, software, and networks flawless. If you cannot complete a problem set before the deadline because your computer crashes or the network goes down, one of your free passes should protect your grade.
Team homework assignments
For most students, studying with classmates is a good way to learn course material. Talking about course concepts will deepen your understanding and make the class more fun. To encourage this, you will be assigned to a team for homework assignments. You and your team will complete threeassignments. Each homework assignment involves answering, in writing, questions that I will distribute.
Each assignment is due at the beginning of class on the date set in the syllabus, so it can be discussed that day. To receive full credit, a homework assignment must be turned in on time. In most circumstances, no credit will be given for an assignment that is more than a couple of hours late. No oneoutside the team (except me) should contribute to a team's answers. Each member of a team has the responsibility to a)come punctually and prepared to meetings, b)contribute to the solutions for each problem, and c) understand each answer the team produces. Your homework grade will be based on how well you fulfill these responsibilities and on your team’s scores on the assignments.
Article summaries
One course objective is for you to understand newspaper and magazine articles written on macroeconomics, and to interpret such articles with the aid of class material. To help you reach this objective, you will read three articles on macroeconomics for the article summary assignments. You will then summarize each and explain its link to lecture or to course reading.
Exams
The midterm and the final exam include will include a mix of multiple choice, short answer, and short essay questions. The second exam (the “Little Exam”) will include only multiple choice questions. All exams will stress issues discussed in class, but about 15% of the weight will fall on material only covered in the reading. Because reviewing the entire semester of class will help solidify your grasp of the course material, the final exam will be comprehensive. To help you prepare, exams from Spring & Fall 2007 are available on the class web site.
Calculating your grade
I describe below the system I plan to use to calculate your grade. I reserve the right to make changes in the system, after consulting the class, if I think it will increase the likelihood that students reach class objectives.
The latter part of this section describes what the course asks of you in five areas: participation, on-line problem sets, team homework assignments, papers, and exams. The three boxes below explain how your work in these five areas will determine your course grade. That grade will be a weighted average of your grades on seven class elements. The first box below shows each element and how it will be weighted in this average. Each element will be graded on a 100-point scale; the second box shows how letter grades relate to that scale. Once I calculate the weighted average at the end of the semester, I need to translate it into a letter grade. The third box shows how I do this.
Weights for each class elementElements / Weights
Class participation / 10%
On-line problem sets / 15%
Team homework assignments / 15%
Article summaries / 15%
Midterm exam #1 / 15%
Little exam / 10%
Final exam / 20%
Total / 100%
/ Number Equivalent of Grades
Grade / Number
Equivalent
A+ / 93
A / 90
A- / 87
B+ / 83
B / 80
B- / 77
C+ / 73
C / 70
C- / 67
etc.
/ Calculating Class Grade
Weighted Average / Class Grade
91.5or higher / A
85.0 – 88.4 / A-
81.5 – 84.9 / B+
78.5 – 81.4 / B
75.0 – 78.4 / B-
71.5 – 74.9 / C+
68.5 – 71.4 / C
65.0– 68.4 / C-
etc.
University and School of Business Policy on Cheating
“Because of the University’s commitment to academic integrity, cheating on course work or on examinations will result in penalties that may include a grade of “F” for the specific exam or course work or a grade of “F” for the course. Any incident of cheating will be reported to the dean of the college in which the course is offered and to the dean of the college or school in which the student is currently enrolled” (University of PortlandBulletin). Students in the School of Business Administration who are turned in for an initial case of cheating will be put on probation. A second cheating incident will lead to dismissal from the School of Business. Note: Plagiarism is considered to be a form of cheating. It consists of taking the ideas, writings, etc. from another and passing them off as one’s own (Webster’s New World Dictionary).
Honors Pledge
All academic work done at the University of Portland must be in full compliance with the University’s Code of Academic Integrity as described in the Student Handbook. The Pamplin School requires all students to include the following pledge and student signature(s) on all work (papers, exams, etc.) submitted to the professor during the course of the semester (please place it on the front page of all submissions). If you are turning in a group paper, it is incumbent upon all members of the group to sign the pledge. This means every individual in the group is responsible for the integrity of the group’s assignment. Any paper turned in without the pledge and the appropriate signature(s) will be returned immediately to the student(s). It will be left to the professor’s discretion on whether or not to assess a penalty for late submission.
Honors Pledge:
As a student of the Dr. Robert B. Pamplin Jr. School of Business Administration I have read, and strive to uphold, the University’s Code of Academic Integrity. I pledge on my honor that I have not given, received, or used any unauthorized materials or assistance on this examination or assignment. I further pledge that I have not engaged in cheating, forgery, or plagiarism and I have cited all appropriate sources.
Student Signature: ______
Students with Disabilities
If you have a disability and require an accommodation to fully participate in this class, contact the Office for Students with Disabilities (OSWD), in the University Health Center (503-943-7134) as soon as possible.
If you have an OSWD Accommodation Plan, you should make an appointment to discuss your accommodations with me. Also, we should meet if you wish to discuss emergency medical information or special arrangements in case the building must be evacuated.
Class,Day, Date / Topics, Reading, Activities, Assignments
1, Tues
Sept. 1 / I. Foundations of Macroeconomics
-Economics: What it is & what it studies
-Introducing microeconomics & macroeconomics
2, Thur
Sept. 3 / -Answering questions about course topics, requirements, etc.
-Business cycles:
-what they are
-a quick tour of the last two cycles (ending with the 2008-9 recession)
-An introduction to the controversy between classical and Keynesian macroeconomics
Read:-Course syllabus
-Ch. 1, pp. 1-2 (another take on what economics is), p.8(microeconomics & macroeconomics)
-Ch. 5)
3, Tues
Sept. 8 / -Measuring the economy’s output (GDP)
-GDP measured via expenditure
-nominal GDP vs. real
Read:-Ch. 6 [But don’t worry about details of:
a) the income approach to measuring GDP (presented in “TheIncome Approach” section) or
b) the new BEA procedure to calculate real GDP (presented in “Calculating the GDP Deflator” and “The Problems of Fixed Weights”.]
4, Thur
Sept. 10 / -Unemployment
-understanding the unemployment rate
-impacts on different groups
-the unemployment rate over a business cycle
Read:-Ch. 7, pp. 123-128
-Clea Benson, “Race Gap: Still Hard at Work,” CQ Weekly, 7/27/2009, pp. 1770-1775 [follow link from course website]
5, Tues
Sept. 15 / -Unemployment
-classifying unemployment’s causes
-recessions, unemployment, and inflation
Read:-Ch. 7, pp. 128-130
6, Thur
Sept. 17 / -Inflation: nominal and real interest rates
-why inflation is & isn’t a problem
-Productivity growth
Read:-Ch. 7, pp. 130-136
7, Tues
Sept. 22 / II. Keynesian Macroeconomics
A. The Simple, 2-Sector, Keynesian Model
-Aggregate output always equals aggregate income-How income affects consumption
Read:-Ch. 8, pp. 139-145
8, Thur
Sept. 24 / Team Homework Assignment #1 due
-What shifts the consumption function?
-Investment, planned & actual
Read:-Ch. 8, pp. 145-147
9, Tues
Sept. 29 / -How the economy’s aggregate output is determined (the forces moving the economy to equilibrium output)
Read:-Ch. 8, pp. 147-151
10, Thur
Oct. 1 / -The spending multiplier
Read:-Ch. 8, pp. 151-155
11, Tues
Oc. 6 / Midterm Exam
12, Thur
Oct. 8 / B. Fiscal Policy
-Adding government to the picture, creating a three-sector model of our economy
-Planned aggregate expenditure: how net taxes (T) & government purchases (G) affectit
-How changing T or G (fiscal policy) affects the budget deficit & aggregate output
Read:-Ch. 9, pp. 159-164
-Ch. 9, Appendix B, pp. 179-180 (up to “The Government Spending and Tax Multipliers Algebraically”)
13, Tues
Oct. 13 / -A quick look at the federal budget
-The budget deficit, how the deficit is financed, and the federal debt
Read:-Ch. 9, pp. 169-175
-“Pangloss revisited: Budget forecasts,”The Economist, Aug 29, 2009
[follow link from course website]
14, Thur
Oct. 15 / Article Summary #1 due
-Fiscal stimulus in the 2008-2009 recession
Oct. 19-23 / Fall Vacation
15, Tues
Oct. 27 /
C. Monetary Policy
-Defining & measuring money [do not worry about “M2” or “Beyond M2”]-How banks create money: a commercial bank’s balance sheet
Read:-Ch. 10, pp. 181-191
16, Thur
Oct. 29 / -How the Federal Reserve System (the Fed) determines the money supply
-the crucial tool of monetary policy: open market operations
Read:-Ch. 10, pp. 191-199
17, Tues
Nov. 3 / Team Homework Assignment #2 due
How interest rates get determined
-the Fed adds to, or subtracts from, the total demand for bonds
How interest rates affect planned aggregate expenditures
Read:ToddEaston, “Monetary Policy, Interest Rates, and Aggregate Expenditure,” July 2007 [follow link from course website]
18, Thur
Nov. 5 / -The financial crisis of 2007-2008
-Fed policy in the face of the financial crisis
Listen to:Alex Blumberg and Adam Davidson,“The Giant Pool of Money,” This American Life, NPR, May 9, 2008, [follow link from course website]
19, Tues
Nov. 10 / -The relationship between unemployment & inflation
Read:Paul Krugman, “Inflation,” Ch. 5 from The Age of Diminished Expectations, 1993[go to <library.up.edu> and click on “Find Course Reserves”]
20, Thur
Nov. 12 / Little Exam
III. International Economics
-Comparative advantage & the terms of trade
Read:-Ch. 19, pp. 353-360
21, Tues
Nov. 17 / -What determines comparative advantage?
-The movement toward freer trade: the GATT, the NAFTA, the WTO, etc.
Read:-Ch. 19, pp. 360-366
22, Thur
Nov. 19 / -The case for making trade more free (beyond comparative advantage)
-The case for leaving trade rules as they are, or for increasing protection
Read:-Ch. 19, 366-372
-Sebastian Mallaby, “More Than Free Trade,” washingtonpost.com, April 18, 2005 [follow link from course website]
23, Tues
Nov. 24 / Article Summaries #2 & #3 due
-The balance of payments: a tool to measure the quantity of dollars demanded and the quantity of dollars supplied on foreign exchange markets
-The impact of imports and exports on equilibrium output
Read:-Ch. 20, pp. 377-384
Nov. 26-27 / Thanksgiving Vacation
24, Tues
Dec. 1 / Exchange rates
-Why the quantity of a currency demanded rises when its exchange rate falls
-Why the quantity of a currency supplied declines when its exchange rate falls
-How the exchange rate moves to its equilibrium value
Read:-Ch. 20, pp. 384-388 (begin with “The Open Economy With Flexible Exchange Rates”)
25, Thur
Dec. 3 / Team Homework Assignment #3 due
-How supply & demand for a currency determine its exchange rate
-What causes a currency to gain or lose value?
Read:-Ch. 20, pp. 388-392
26, Tues
Dec. 8 / -Monetary & fiscal policy with flexible exchange rates
Read:-Ch. 20, pp. 392-394
27, Thur
Dec. 10 / -Reviewing the semester: what’s key?
Mon.
Dec. 14 / Final Exam for Section C, 8:00 am – 10:00 am
Wed.
Dec. 16 / Final Exam for Section D, 10:30 am – 12:30 pm