Halefom Belay
Maxey 229
Economics-308--Intermediate Macroeconomics
Spring 2026
Phone: 527-5150
Office hours: Mon 4:00 -5:00pm & Appts.
Required Text: Mankiw, N. Gregory - Macroeconomics, 11th edition (Worth Publishers)
Solutions Manual for the text is posted on Canvas under file folder: Answer Keys.
Course Description: Macroeconomics is a branch of economics that studies the economy as a
whole. The course will focus on the main factors that determine, among other things, the level of
the aggregate gross domestic product, the rate of inflation, the overall unemployment rate, and
the living standard. What makes macroeconomics exciting is the light it sheds on what is
happening around the world, from the sharp upturn of inflation and the recent global pandemics
to the large U.S. current account deficits and to the economic rise of China. These events—and
many more—will be discussed on this course.
Attention will be paid to the macroeconomic implications of the Federal Reserve’s and the
government’s policy. Major attention will also be paid to the important issue of economic
growth. The argument about whether monetary policy should be conducted following a rule or
using discretion will be highlighted. Other topics will include production functions,
consumption functions, investment functions, and money demand functions. Alternative schools
of thought including the Classical School, the Keynesian and the New Keynesian Schools will be
treated.
Learning Outcomes: Upon successful completion of the course,
(1) Students will be able to identify the determinants of various macroeconomic aggregates such
as output, unemployment, inflation, productivity and the major challenges associated with the
measurement of these aggregates.
(2) Students will learn the concept of competitive general equilibrium in macroeconomics: a set
of prices and quantities such that all actors are behaving optimally and how all markets clear in
the long-run.
(3) Students will learn that saving/investment is fundamentally a dynamic tradeoff, and that the
real interest rate summarizes the costs of that dynamic tradeoff.
(4) Students will study fluctuations in a simple, dynamic neoclassical model of the economy.
They will be exposed to some basic business cycle “facts” and will “take the model to the data”,
observing where it does well and where it fails.
(5) Students will learn extensions of the neoclassical model; chiefly Keynesian frictions
associated with sticky wages and prices. They will study monetary policy in depth, with an
exposure to the rules vs. discretion debate, commitment, and the Taylor rule.
(6) Students will learn to explore appropriate macro policy options in response to the state of the
economy; understand the effectiveness and limitations of fiscal and/or monetary policy for a
given state of the economy; choose an appropriate fiscal and monetary policy for a given state of
the economy.
(7) Students will receive a rigorous treatment of modern models of economic growth, building
off the Solow Model. They will learn the concepts of the steady state, convergence, and growth
accounting. They will be exposed to research on cross-country differentials in standards of living
and policies aimed at improving growth and standards of living.
(8) Students will study open economy versions of the dynamic economic models discussed
above. Students will become familiar with the basics of open macroeconomic models, with the
basic features of the international financial and monetary systems, and their implications for
national economic policy.
Grading Policy: There will be quizzes, homework, two mid-term exams and a final exam.
Credit for determining the course grade will be distributed as follows:
Mid-term exam
Final exam
Quizzes, homework and attendance
25% each
30%
20%
Attendance Policy: It is very important to note that a student fails this class if that student’s
absences (authorized or not) total at least 20 % of class meeting time. This excluding those
absences that are due to the student observing a religious holiday or are an accommodation under
the ADA.
Special Note: If you are a student with a disability who will need accommodations in this
course, please meet with Richard Kaplan, Director of Academic Resources: Disability Support
(Olin Hall 314, 509.527.5767, middletr@whitman.edu ) for assistance in developing a plan to
address your academic needs. All information about disabilities is considered private; if I
receive notification from Dr. Kaplan that you are eligible to receive accommodation due to a
verified disability, I will provide it in as discreet a manner as possible.
Please note that the mid-term exams and quizzes are tentatively scheduled. I will
announce the exact dates for the exams in class ahead of time.
Course Outline: Here is a brief outline for the course.
PART I. INTRODUCTION TO MACROECONOMICS
Week of the month
Chapter 1. Introduction to Macroeconomics
January 20
This chapter presents a brief introduction to macroeconomics. The chapter explains the type of
questions macroeconomists address, introduces the concept of an economic model, and discusses
the role of price flexibility and price rigidity in macroeconomic models.
Chapter 2. The Data of Macroeconomics
January 27
This chapter is an introduction to a macroeconomic data that emphasizes real GDP, the consumer
price index, and the unemployment rate. This chapter introduces the circular flow. It contains a
standard discussion of GDP and its components, explains the different measures of inflation, and
discusses how the unemployment rate is measured.
Review of the Aggregate Demand and Aggregate Supply Model (AD/AS)
The AD/AS model provides a framework for understanding the economy works broadly. It also
provides a framework of organizing a range of topics to be covered in this class. Please read
Chapter 11 of your textbook or read your econ 102 textbook on AD/AS model.
PART II. CLASSICAL THEORY: THE ECONOMY IN THE LONG RUN
This part presents the classical model of how the economy works, building the foundation
for growth theory and business cycle theory developed in Part 4.
Chapter 3. The National Income
February 3
This chapter presents the classical model of the real side of the economy. It provides a complete
description of how the real side of the economy works in the long run, in the sense that it
explains all the markets and transactions illustrated in the circular flow diagram.
Chapter 4. The Monetary System
February 10
This chapter presents standard material defining what money is and explaining how the
money supply process works. The chapter begins by describing the functions and types of
money along with how money is controlled and measured. Next, the chapter discusses the
role of banks in the monetary system. Finally, the chapter closes with an analysis of how
central banks influence the money supply and problems in monetary control.
Chapter 5. Inflation: its causes, effects and social costs
February 17
This chapter explains the classical theory of the causes, effects, and social costs of inflation.
It introduces topics that are central for understanding the economy and presents concepts
used elsewhere in the textbook.
Chapter 6. The Open Economy
March 3
This chapter introduces a simple model of a small open economy in the long run. It provides
students with the tools to think about international flows of capital and goods, emphasizing that
these ultimately depend upon the determinants of saving and investment.
PART III. BUSINESS CYCLE THEORY: THE ECONOMY IN THE SHORT RUN
Chapter 11. Introduction to Economic Fluctuations (The AD/AS Model) March 10
This chapter examines the behavior of the economy in the short run. It introduces students to
short-run economic fluctuations, the importance of sticky prices, and the aggregate demandaggregate supply model.
Chapter 12. Aggregate Demand I
March 31
This chapter introduces students to the IS-LM model. The chapter is taken principally with the
derivation of the IS and LM curves, prior to the use of the model in Chapter 12.
Chapter 13. Aggregate Demand II
April 7
This chapter uses the IS-LM model to show the short-run effects of fiscal and monetary policies
on output and the interest rate when prices are fixed and also explains how the IS-LM model
provides a theory of aggregate demand.
Chapter 14. Aggregate Demand in the Open Economy
April 14
This chapter presents the Mundell-Fleming model of a small open economy in the short run.
Essentially, it is a synthesis of the IS-LM model and the small open economy model of Chapter
6.
PART IV. GROWTH THEORY: THE ECONOMY IN THE VERY LONG RUN
The purpose of Chapters 8 and 9 is to teach students about some of the determinants of economic
well-being and to offer some explanations of international differences in living standards.
Chapter 8. Economic Growth I
April 21
These next two chapters present the Solow growth model. Chapter 7 proceeds by first holding
population and technology constant and showing how the rate of saving determines the steadystate capital-labor ratio. The chapter then discusses the positive and normative implications of
the Golden Rule level of accumulation.
Chapter 9. Economic Growth II
April 28
This chapter continues the presentation of the Solow growth model started in Chapter 8. The
chapter begins by adding labor-augmenting technological progress to the model. Once the
complete model is developed, it is used to address how public policy affects growth and
development.
Chapter 10. Continue on Economic Growth I and II
May 5
This summarizes the presentation of the Solow growth model started in Chapter 8. We will
attempt to explain the long-run economic growth using graphical and mathematical analysis by
varying capital accumulation, population or labor force growth rate.
Tentative Schedules For Exams
First exam (quiz) or homeworks
Week of the month
(chapters 1, 2 and AD/AS model)
February 10
First Mid-term Exam
(chapters 3-6)
March 3
Second Mid-term Exam
(Chapters 11-14)
April 14
Final Exams week
(Chapters 8, 9, 10, 11, 12 and 13)
On Monday, May 19th , (9:00-11:00am)
References:
* The New Palgrave is a four-volume encyclopedia of economics.
* The Brookings Papers on Economic Activity contain articles on current macroeconomic topics
and a summary of discussions of those articles by leading macroeconomists.
* The Economic Report of the President and The Federal Reserve Bank of St. Louis Web site are
an excellent source for basic macroeconomic data.
* Economic news in The New York Times, The Wall Street Journal and the Economist and
opinion pieces on the editorial pages of these papers are worth reading to keep up to
date on current events in the world around you.