EL Camino College
Department of Behavioral & Social Sciences
Economics 1
Principles of Macroeconomics
Section 2248, Wednesday 6:00-9:10 PM, Social science, Room 117
Spring 2012
02/15/2012– 06/06/2012
Instructor: F. Tahernia
Office: ARTB 320
Phone: (310) 660-3593 ext. 4610
E-mail: tahfar@Hotmail.com
Office Hours: Wednesday 5:00 – 6:00 PM and by appointment.
REQUIRED TEXTBOOK: Roger Le Roy Miller, Economics Today The Macro View.
Addison Wesley Fifteenth Edition, Topical handouts will also being provided. In addition, students are urged to read
Wall Street Journal or Business Week to keep current on economic issues.
COURSE DISCRIPTION:
This course is an introduction to fundamental concepts in macroeconomics. As a sub-discipline within economics,
macroeconomics examines the economy as a whole. Our focus in this course is on topics such as: GDP,
unemployment, inflation, business cycle, national debt, fiscal policy, monetary policy, economic growth,
international trade and foreign exchange rate. We also examine the extent of poverty and income distribution in the
U. S. economy today and the macroeconomics consequences of the current financial crisis. Many of you may have
come across some of these terms in the news media or even in your high school economics courses. Our goal here is
to understand not only what these terms mean but also how these topics relate to our daily lives. In addition, we will
examine closely how these economic statistics are officially calculated and some of the limitation in interpreting
these numbers.
COURSE OBJECTIVES
1. Define and describe the principle tools utilized in economic analysis.
2. Describe the central economic problem of scarcity and the economic resources available to
produce goods and services.
3. Describe the determinants of supply and demand and their effects on equilibrium price and
quantity.
4. Analyze the economic roles played by households, business firms, governments, and international
trade in the U.S. economy.
5. Calculate the rate of unemployment and the rate of inflation utilizing numerical data.
6. Define GDP, identify the component of GDP, and calculate GDP utilizing numerical data.
7. Describe economic growth.
8. Analyze how various economic changes impact national output, unemployment and inflation
using an aggregate demand & aggregate supply model.
9. Describe the principle tools of fiscal policy and how the federal government uses these tools to
correct unemployment problems and inflation.
10. Explain the operations of private banks and the role the private banking system plays in the
conduct of Federal Reserve Bank Monetary policy.
11. Identify the principal tools of monetary policy and explain how they are utilized to correct
problems of unemployment and inflation.
12. Understand and evaluate economic globalization.
13. Understand how foreign exchange rates are determined and their macroeconomic consequences.
EXAMINATIONS:
There will be three non-cumulative midterms and a cumulative final exam. To allow for problems, which may arise,
I will count two higher scores achieved on the three midterms in your grade calculation. This does not apply to the
final exam. Exams could be in the form of true & false questions, multiple choice questions, essay questions,
diagrams, and numerical problems. The tentative dates of these exams are given below, however the exact date of
the exam may change depending on our progress. If we do so, indeed, change the date, you will have a week’s
notice in advance.
Date of exams: First: March 7, 2012 and due date for first homework.
Second: April 4, 2012 and due date for second homework.
Third: May 16, 2012 and due date for third homework.
Final: June 6, 2012 .
HOMEWORK:
There will be three written homework assignment most of them are problem set that comes along with the textbook.
These assignments are due in class on the day indicated.
GRADING:
Your final grade will be computed as follows:
Midterms
50% (25% each)
Homework
15% (5% each)
Final
30%
Class participation
and attendance
5%
Total
100%
Also there are opportunities to earn a maximum of 5% extra credit points during the course of the semester.
MAKE-UP POLICY:
I do not give make up tests, so a missed midterm exam will be dropped as your worst score on the three-midterm
exams. I also do not give Incomplete, so a missed final exam will be counted as a zero in your final grade
determination.
ATTENDANCE& CLASS PARTICIPATION:
A portion of your grade is based on attendance and participation. I will take attendance at every class and this may
be taken at anytime during the class period. If you are not physically present at that time you will be marked absent.
If you are late, you will be counted as tardy. If you are tardy twice it will be count as absent. You are allowed one
unexcused absence. Any more than that will impact your course grade. In addition to attendance, you are also
required to participate effectively in class. To do this you need to read appropriate assignment ahead of time, ask
questions, and provide relevant input into class discussion.
ADA STATEMENT:
EL Camino College is committed to providing educational accommodations for students with disabilities upon the
timely request by student to the instructor. A student with a disability, who would like to request an academic
accommodation, is responsible for identifying herself/himself to the instructor and to the Special Resources Center.
To make arrangement for academic accommodations, contact Special Resources Center.
COMMUNICATION:
Please feel at ease at any point in talking to me before, after, our during my office hours. If you are unclear about
any part of my lecture or textbook, please do not hesitate to ask me. I am here to help you.
READING LIST- STUDENT OBJECTIVES:
Part I
INTRODUCTION TO ECONOMICS
1- Defining Economies.
2- Microeconomic versus Macroeconomists.
3- Positive versus Normative analysis.
4- Define the scarcity-choice problem.
5- Verbally and graphically analyze direct and inverse relationship.
CHAPTER 1
TOOLS OF ECONOMIC ANALYSIS
1- Choice and opportunity cost.
2- Production possibilities curve and the concept of trade offs.
3- Marginal benefit and marginal cost.
4- Economic growth and Production Possibilities Curve.
5- Comparative advantage and gains associated with specialization.
CHAPTER 2
DEMAND AND SUPPLY ANALYSIS
CHAPTER 3 & 4
1- The Law of Demand.
2- Demand curve, schedule and demand function.
3- Shift of the Demand curve.
4- The Law of Supply.
5- Supply curve, schedule and supply function
6- Shift of the Supply curve.
7- Market equilibrium, change in market equilibrium, and market disequilibrium.
8- Change in demand and supply.
9- The policy of Government-Imposed Price Control. (Rent control & Minimum wage).
THE AMERICAN ECONOMY IN THE GLOBAL SETTING
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CHAPTER 5 & 6
Economic decision makers.
Economic functions of Government and public spending.
Paying for public sector.
Systems of taxation from the point of view of producers and consumers.
Part II
MEASURING A COUNTRY’S PRODUCTION
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UNEMPLOYMENT, INFLATION, & DEFLATION
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CHAPTER 8
The Simple Circular Flow.
National Income Accounting.
Two Main Methods of Measuring GDP.
Real versus Nominal GDP.
Business Cycles.
CHAPTER 7
Unemployment and Full employment.
The Major types of Unemployment.
Inflation and Deflation.
Anticipated versus Unanticipated Inflation
Changing Inflation and Unemployment. Business Fluctuation.
Part III
AGGREGATE DEMAND & AGGREGATE SUPPLY
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Output Growth and the Long-Run Aggregate Supply.
Total Expenditure and Aggregate Demand.
Shifts in the Aggregate Demand Curve.
Long-Run Equilibrium and the Price Level.
CHAPTER 10
CLASSICAL AND KEYNESIAN MODEL
CHAPTER 11, 12, APPENDIX-12
The Classical Model.
Keynesian Economics and Short-Run Aggregate Supply Curve.
Output Determination Using Aggregate Demand & Aggregate Supply (Fixed & Flexible Price Level).
Shift in the Short-Run Aggregate Supply Curve.
Consequences of Shift in Aggregate Demand and Aggregate Supply Curves.
Consumption Function, Investment Function, Government Expenditure Functions, and Net Exports
Function.
7- Macroeconomic Equilibrium without Government and with Government.
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FISCAL POLICY AND THE FEDERAL BUDGET
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CHAPTER 13, 14, APPENDIX-13
Tools of Fiscal Policy.
Spending Multiplier.
Tax Multiplier.
Balanced Budget Multiplied.
Crowding Out Effect.
Discretionary Fiscal Policy & Automatic Stabilizers.
Problems with Fiscal Policy.
Part IV
MONEY AND BANKING SYSTEM
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Functions of Money.
Defining Money.
Financial Institution in the U.S.
The Federal Reserve System.
Federal Deposit Insurance.
MONETARY POLICY
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CHAPTER 16 &17
Money Creation.
The Money Multiplier.
Demand and Supply of Money.
Money and Aggregate Demand.
How the Fed Influences Interest Rates.
Targets for Monetary Policy.
Monetary Policy and Inflation.
ECONOMIC GROWTH
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CHAPTER 15
CHAPTER 9 & 19
Define Economic Growth.
Saving: A Fundamental Determinant of Economic growth.
Labor Resources and Economic Growth.
Capital Goods and Economic Growth.
International Comparisons.
INTERNATIONAL FINANCE
1- Balance Payments and International Capital Movements.
2- Determining Foreign Exchange Rates.
3- Fix versus Floating Exchange Rates.
CHAPTER 34