Econ 1010 Principles of Macroeconomics
Fall 2008
Instructor: Dr. Kim Andrews
Office Hours: TR 2:00-3:00, and by appointment
e-mail: andrews@ucmo.edu
Office: 307-C Dockery
Office Phone: 543-4788
Text
N. Gregory Mankiw, Principles of Economics, 4th Edition
Aplia
www.aplia.com
This web site will be your source for practice and graded homework assignments.
Course Description
Principles of Economics 1010 is an introductory course in Macroeconomics. The course introduces the structure,
operation, and performance of the U.S. economy. Our investigation of the economy will be both descriptive and
analytical. Special emphasis will be given to the measurement of national economic performance, the national economic
problems of inflation and unemployment, and the role of the government in conducting national economic policy. You
will be introduced to basic concepts and methods of analysis which will be applicable in other courses in economics,
business, social science, and humanities.
Expected Student Outcomes
Student Outcomes are the things that students should know and be able to do after taking a course. The student outcomes
for this course are listed in Appendix B. This appendix is in the detailed syllabus posted to Black Board.
HCBA Code of Conduct
The HCBA Code of Conduct can be found at http://www.ucmo.edu/x9595.xml. This code provides a set of guiding
principles that help to create a supportive and ethical educational environment. Please read and be familiar with the seven
principles set forth in the code.
Course Requirements:
Course requirements consist of four exams – including the final exam, homework assignments, and four minimum
proficiency quizzes. Each exam, including the final exam, will be worth 100 points. If you miss an exam, you must
contact me IMMEDIATELY. If you have a university accepted excuse, the exam may be made up. The make-up exam
must be taken within one week of the date the missed exam was given. If you do not have a university accepted excuse,
you will take a comprehensive final exam during the time scheduled for this class’s final exam. The points on the
comprehensive final will count for the missed exam and for the final exam. If you have a question as to whether your
excuse is accepted by the university, please refer to your student planner. It defines absences recognized by the
university.
The Aplia website will be used for both practice and graded homework assignments. These will be online assignments
worth a total of 100 points. Any homework not turned in on time will receive a score of zero. Please note that these
assignments will be done online, and the computer is a strict enforcer of the completion deadline. In addition, recall that
computers will occasionally experience some problems and downtime. To that end, use your time wisely. Procrastination
may result in whining (not mine) and lost points. i.e. the computer being down is not a legitimate excuse for completing a
homework assignment late. Please refer to the Aplia student registration sheet for details on how to access the website.
Satisfactory completion of four Minimum Proficiency Exams (MPEs) is also required by the Department of Economics
and Finance. MPE requirements and procedures are described in detail in Appendix A. Each MPE is worth 10 points,
and you will be awarded the score you earn when you initially take the MPE with the class. Any MPE that is not taken
initially with the class will receive only a pass or fail score. No points will be awarded. MPEs taken the last week of
class will not be graded until finals week. Note: the competencies for each MPE are listed in Appendix C. This
appendix is in the detailed syllabus posted to Black Board.
Test 1:
100 points
Test 2:
100 points
Test 3:
100 points
Final:
100 points
MPEs:
40 points
Homework: 100 points
Total:
540 points
Grades:
Grades will be assigned according to the following scale:
A
90 – 100%
B
80 – 89%
C
70 – 79%
D
60 – 69%
F
below 60%
Academic Honesty:
Cheating of any kind will not be tolerated. If you are unclear as to what constitutes cheating then you should review
Central’s policy on academic honesty found in the student planner.
COURSE SCHEDULE: This outline is provided for general orientation and is subject to modification during the
semester. All reading assignments refer to the course text. Additional readings may be suggested or required during the
course.
I.
Introduction to Economic Analysis
Introduction
Chapter 1
Ten Fundamentals
Chapter 1
Production Possibilities
Chapter 2
Interdependence and Trade
Chapter 3
Demand
Chapter 4
Supply
Chapter 4
Market Equilibrium
Chapter 4
Applications of the Market Model
Chapter 6 (pp. 113-124)
Role of Government
Lecture
1st HOUR EXAMINATION
II.
All previous
Measuring National Economic Performance
National Economic Objectives
Lecture
Measuring National Economic Performance
Chapter 23
Gross Domestic Product (GDP)
Chapter 23
Prices and Inflation
Chapters 24 & 30 (pp. 675-684)
Economic Growth
Chapter 25
Unemployment
Chapter 28
Long term trends and Business Cycles
Lecture
2nd HOUR EXAMINATION
All previous
III. Elementary Macroeconomic Theory
A Simple Macroeconomic Model
Chapter 33
Aggregate Demand/Aggregate Supply
Chapter 33
Macroeconomic Equilibrium
Chapter 33
3rd HOUR EXAMINATION
All previous
IV. Money and Financial Markets
Money
Chapter 29
The Federal Reserve System
Chapter 29
Monetary Policy
Chapter 29
Quantity Theory of Money
Chapter 30 (pp. 668-670)
V. Stabilization
Stabilization Policy
Chapters 30 and 34
VI. International Sector
International Trade
Chapter 9
FINAL EXAMINATION
All previous
Appendix B
Student Outcomes for Econ 1010
Upon completion of each section of material, students should be able to perform the specific tasks listed below.
I.
1.
2.
3.
4.
5.
6.
Introduction to Economic Analysis
Describe the nature and purpose of economic theory and economic models.
Identify the relationship between scarcity and various economic problems.
Apply the Production Possibilities Model to explain scarcity, opportunity cost, efficiency, and economic growth.
Apply the competitive market model to:
a. Identify causes of changes in prices and output levels.
b. Predict the impact of various changes on prices and output levels.
c. Explain the concepts of “market” price and production levels.
Identify and evaluate sources and effects of “market failure”.
Evaluate the role of government and identify the economic benefit of specified governmental activities.
II. Measuring National Economic Performance
1. Explain the economic benefits derived from full employment, general price level stability, economic growth, and stability in the
international balance of payments.
2. Describe, interpret, and calculate the following measures of national economic performance:
 gross national product (real and nominal)
 unemployment rates
 inflation rates
 real and nominal growth rates
3. Explain the behavior of the measures of national economic performance over the business cycle.
4. Use the measures of national economic activity to evaluate the performance of the U.S. economy.
5. Explain and interpret U.S. measures of inflation and unemployment, and explain the consequences of these phenomena from a
national economic perspective.
III.
1.
2.
3.
6.
Elementary Macroeconomic Theory
Explain the assumptions and structure of the Aggregate Supply-Aggregate Demand model.
Find equilibrium price and income/output using the graphical specification of the Aggregate Supply-Aggregate Demand model.
Use the graphical specification of the Aggregate Supply-Aggregate Demand model to evaluate the causes and effects of changes
in national economic conditions.
Apply the Aggregate Supply-Aggregate Demand and Quantity Theory models to explain the causes of inflation and
unemployment.
Describe considerations for undertaking macroeconomic stabilization policy
IV.
1.
2.
3.
4.
5.
Money and Financial Markets
Define “money” and explain the process of money creation in the U.S. money and banking system.
Describe the structure and operation of the Federal Reserve System.
Explain the role and processes of the Federal Reserve System in controlling the U.S. money supply.
Evaluate the efficacy of selected monetary policy instruments in controlling the U.S. money supply.
Explain the assumptions and structure of the Quantity Theory model.
4.
V. Stabilization
1. Describe the tools of fiscal policy and the use of fiscal policy tools to stabilize the national economy.
2. Describe the tools of monetary policy and the use of monetary policy tools to stabilize the national economy.
VI. International Sector
1. Use the demand/supply model and the concepts of consumer and producer surplus to describe the impact of trade and trade
restrictions on the economy
Appendix C
MPE Competencies
Minimum Proficiency Exam #1
ECON 1010 COMPETENCY: Opportunity Cost/Production Possibilities
BACKGROUND: Opportunity cost--the real economic cost of any decision--is fundamental to economic analysis. The Production
Possibilities Model portrays opportunity cost in an easily-managed framework to depict and evaluate economic alternatives. To
understand more advanced economic concepts, a student must be able to recognize and apply the concept of opportunity cost.
Opportunity cost is a real-world phenomenon. The ability to recognize and articulate opportunity cost is essential to understanding
individual, business, and public policy decisions.
REQUIREMENTS: Read a brief case or vignette which involves production or consumption trade-offs. Apply opportunity cost and
Production Possibilities concepts to analyze the reading.
PERFORMANCE CRITERIA:
1. Graphically depict production (or consumption) trade-offs in the Production Possibilities framework.
2. Use your graphical depiction to identify opportunity cost, efficient alternatives, inefficient alternatives, and unattainable
alternatives.
3. Show shifts in the Production Possibilities Curve that may arise from various possible causes.
4. Recognize and describe opportunity cost from a case scenario.
Minimum Proficiency Exam #2
ECON 1010 COMPETENCY: Demand and Supply
BACKGROUND: Most economic outcomes in a market oriented economy are determined by the interaction of buyers and sellers.
The competitive market model provides a simple yet sound analytical framework for evaluating market outcomes, predicting the
impact of policy decisions on market outcomes, and forecasting the influence of changes in buyer and seller behavior on market
outcomes. The competitive market model provides a simple tool for evaluating real-world changes in economic activity and for
assessing policy changes. Understanding the competitive market model is a prerequisite to understanding other types of market
structures.
REQUIREMENT: Read a brief case or vignette which involves changes in buyer behavior, seller behavior, or economic policy.
Apply the competitive market model to analyze the reading.
PERFORMANCE CRITERIA:
1. Recognize and list factors leading to a change in market demand and/or market supply.
2. Graphically depict the market in competitive equilibrium.
3. Graphically depict the impact of the changes described in the reading on the market.
4. Verbally summarize the impact of the changes described in the reading on the market.
Minimum Proficiency Exam #3
ECON 1010 COMPETENCY: Inflation and Unemployment
BACKGROUND: Inflation and unemployment are the two most significant recurring national economic problems that we try to
ameliorate using national economic policy. To understand national economic policy, one must understand the causes, effects, and
measurement of inflation and unemployment.
REQUIREMENT: Read a brief case or vignette which involves inflation and unemployment. Identify the cause (or type) of inflation
(or unemployment) described in the reading. Identify appropriate measures of inflation (or unemployment) that are appropriate to
the case. Describe the potential impact of inflation (or unemployment) on national economic wellbeing. Identify changes in inflation
and unemployment rates in the context of the business cycle.
PERFORMANCE CRITERIA:
1. Identify the cause (or type) of inflation or unemployment.
2. Identify measures of inflation or unemployment appropriate to the case.
3. Identify "economic costs" of inflation and unemployment.
4. Identify parts of the business cycle and describe the behavior of inflation and unemployment rates during each part of the
cycle.
5. Calculate inflation and unemployment rates from basic data.
Minimum Proficiency Exam #4
ECON 1010 COMPETENCY: Aggregate Demand-Aggregate Supply
BACKGROUND: The Aggregate Demand-Aggregate Supply model is a simple yet surprisingly powerful framework for evaluating
the causes and effects of long-run and short-run changes in national economic conditions. The model is also well adapted to the
analysis of inflation, unemployment, and economic policy. The Aggregate Demand-Aggregate Supply model can be applied to
analysis of many national economic issues or modified to accomplish more advanced levels of economic analysis.
REQUIREMENT: Read a brief case or vignette which involves national economic performance and/or policy. Use the Aggregate
Demand-Aggregate Supply model to evaluate causes and/or effects of changes in national economic conditions as described in the
case.
PERFORMANCE CRITERIA:
1. Recognize and list factors leading to a change aggregate demand, short-run aggregate supply, and/or long-run aggregate
supply.
2. Graphically depict initial national economic conditions (long run and/or short run) using the Aggregate Demand-Aggregate
Supply model.
3. Graphically depict the long run and/or short run impact of the changes, including policy impacts, using the Aggregate DemandAggregate Supply model.
4. Verbally summarize the impact of the changes described in the reading on the national economy.