Economics 1 – Fall 2014 (81081 and 81384)
(Macroeconomics)
Professor: V. Lee Prescott
E-mail: vprescot@solano.edu
Voice Mail: (707) 864-7000 ext. 5072
SCC H drive contains a copy of the syllabus, lecture slides and graph exercises (access
from campus computer or go online to http://bcs.solano.edu
- Note: My preferred method of communication is email! Please use email whenever
possible.
Professor Consultation: by appointment. Feel free to consult with me about any assistance you may need
concerning this course. You may email or call anytime to schedule an appointment. Before and/or
after class is my preferred time to meet.
Academic Standing or Personal Problems/Situations: If you have any questions concerning your
academic standing, please contact me. If you have any personal problems that may influence your
behavior/performance/attendance in the class, please let me know about them.
Academic Regulations: Each student is encouraged to familiarize him/herself with the “Academic
Regulations” outlined in the college catalogue. Please note: students are responsible for
withdrawing from this course or from this college. Please familiarize yourself with the important
dates for withdrawing from this course by referring to the catalogue or online information.
Testing and Grading: Your performance on the tests will comprise over 90% of your final grade for the
course. Grading will be based on the following scale:
90 – 100 “A”, 80 – 89 “B”, 66 – 79 “C”, 56 – 65 “D”, 55 and Below “F”.
In order for a student to receive a grade of “A” or “B” the student must turn in all of the
homework assignments, including the article assignments, in satisfactory condition. All
assignments must be neat, typed or legible, free of spelling errors, stapled, and written in complete
sentences. Late assignments are not accepted.
The tests will generally consist of forty multiple choice questions, each worth two points (40x 2 =
80) and one essay question worth twenty (20) points for a total of 100 points each. For scheduled
tests, consult your course outline on page 2 of this handout. Homework is worth 4 points each and
the article assignment is worth 25 points.
Special Notes on Testing:
1. You will need to purchase (available in the College Bookstore) a SCANTRON MINI ESSAY
book, FORM #886-E. You will also need a #2 pencil.
2. MAKE-UP TEST….One only, for legitimate reasons. Unless the make-up test is cleared by the
professor ahead of time, there will be an automatic 10 points taken off for not taking the test at the
scheduled time. Make-ups will be given only by appointment. If you fail to take the missed test as
scheduled, an automatic score of “0” will be given. Please note: there is no make-up test for the
final exam, no exceptions.
Attendance: After you are late to class twice, each additional time you are late to class will be handled as
an absence. Absences can affect your grade (see next paragraph). Be on time.
Other Grade Factors: Class participation may be included as a minor part of your overall grade. Since
you can’t participate if you’re not in class, attendance will be one indication of participation. Also,
occasionally I may allow some optional extra credit assignments, but do not rely on these
relatively few extra credit points to significantly improve your grade.
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Tentative Outline
Econ 1
Macroeconomics
Professor V. Lee Prescott
Required Text: Macroeconomic
19th Edition by McConnell Brue Flynn
(Customized for my students)
Strongly encouraged: Accompanying Study
Guide
Exact days of tests are purposely not listed because dates will vary according to classroom progress and
we may need the flexibility to adjust test schedules. I will give you notice before a scheduled test. This is
another good reason to be in class.
Chapter
Title
1
3
TEST #1
7
8
9
TEST #2
10
11
TEST #3
11
13
TEST #4
14
16
TEST #5


Limits, Alternatives, and Choices
Demand, Supply, and Market Equilibrium
CHAPTERS 1 and 3 HOMEWORK DUE THE DAY OF THE TEST!
Measuring Domestic Output and National Income
Economic Growth
Business Cycles, Unemployment and Inflation
CHAPTERS 7, 8 and 9 HOMEWORK DUE THE DAY OF THE TEST!
Basic Macroeconomic Relationships
The Aggregate Expenditures Model (up to, but not including the public sector)
CHAPTERS 10 and 11 HOMEWORK DUE THE DAY OF THE TEST!
AE Model continued - Adding the Public Sector (starting on public sector)
Fiscal Policy, Deficits, and Debt
CHAPTERS 11 and 13 HOMEWORK DUE THE DAY OF THE TEST!
Money, Banking and Financial Institutions
Interest Rates and Monetary Policy
FINAL: CHAPTERS 14 AND 16 HOMEWORK DUE THE DAY OF
THE TEST!
Final exam schedule: CRN 81081 – 12/10/14 – 8:00am
Final exam schedule: CRN 81384 – 12/11/14 – 8:00am
Homework assignments are found at the end of each chapter. Complete the “Questions” and “Problems”
as designated in the table below.
Chapters
1
3
*************
7
8
9
*************
10
11
*************
11
13
*************
14
16
Questions
Question #1 and 10. Problem #5 and 8. Appendix problem #1.
Question #2, 3, 5, and 6. Problem #3 and 4.
***************************
Question #4 and 9. Problem #4 and 6.
Question #1.
Question #1, 5, 8 and 9. Problem #3.
***************************
Question #1 and 7. Problem #1 and 9.
Question #1. Problem #1, 2, 4 and 5.
***************************
Question #7 and #8.
Question #4, 8 and 10. Problem #1.
***************************
Question #3, 5, and 8.
Question #1, 2, 6, and 7.
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Article Assignment: This 25 point assignment is due the last day of class. For each chapter, find an
article in a recognized news source (newspaper, magazine or online) that relates to a concept from that
chapter. Explain how the article relates to the concept from the chapter. Your work must be typed or
legible and clearly show me that you understand the concept. Attach the article to your written work. You
must include a cover page and table of contents showing the chapter, concept and source. Following is
an example of an article assignment:
[QUOTE] “In chapter 3 we discussed the concepts of demand and supply. This article from CNN Money
relates directly to the concept as it considers that the price of oil is currently abnormally high because of
factors on both the supply side and demand side.
In particular, unrest in the Middle East continues to curtail the production of crude oil, which lessens the
available supply. The article specifically mentions “hot spots” of Libya, Egypt, Syria and Bahrain, but even
without political unrest, we still have the ongoing supply limits imposed by OPEC (Oil Producing Exporting
Countries) which tend to keep supply low on a continuous basis.
Combining supply constraints with growing demand ultimately results in higher prices. While the United
States continues to be the largest consumer of oil at 20% of world production, consumption in other
countries is growing at an even faster pace than the U.S. The author specifically mentions China, but
other nations, such as India are also expected to experience strong growth. These issues coupled with
the reality that crude oil hydrocarbons are a finite commodity on planet earth would suggest that high
price trends could very well be the long-term norm, despite the normal short-term ups and downs of
prices from changing market conditions.”
Bernanke's fuel, oil's rally
CNN Money - May 2, 2011
By Daryl Jones
In his press conference last week, Federal Reserve Chairman Ben Bernanke highlighted his belief that
high commodity prices are simply transitory in nature. He pegged the current rise in oil prices to both
supply and demand. On the supply side of the equation, he noted unrest in the Middle East as currently
constraining oil production, which is fair point, especially given the sharp decline in Libyan production. On
the demand side, he highlighted the continuing growth in demand from emerging markets. Several factors
contribute to oil prices:
1. Geopolitical – In late March our key takeaway was that civil unrest was set to accelerate in the
Middle East and it has done so. Currently, the key hot spots are Libya, Egypt, Syria and Bahrain,
with long term outcomes still difficult to determine. Since the March call, this factor has become
even more prevalent.
2. Supply & Demand – In the United States, which consumes roughly 20% of the world's oil
production, demand is clearly starting to slow as indicated by the most recent data points from the
Department of Energy, which showed a much larger than expected build in oil inventory.
Conversely, Chinese demand was up 11% year-over-year, which suggests continued strong
growth of oil demand out of the world's second largest consumer, albeit this was a slowdown from
February. Of our three factors, this is the one that is marginally less positive from our long oil call
on March 23rd.
3. Monetary Policy – Based on Chairman Bernanke's comments from last week, it seems unlikely
that the Federal Reserve will raise rates over the intermediate term. In that period, it is likely that
most other major economies raise rates at least once, if not more than once. Thus global
monetary policy will, over the course of the next few months, move even further away from U.S.
monetary policy, which is negative for the U.S. dollar and positive of the inversely correlated price
of oil. [END QUOTE]
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Additional Course Information
Student Learning Outcomes (SLO):
 Describe basic economic concepts, identify market equilibrium and be able to
recommend appropriate fiscal and monetary policies to reduce unemployment and control
inflation and increase GDP.
Other Student Performance Objectives:
 As a result of successful completion of this course, a student will be able to:
1. Explain what an economic principle is and how economic principles are obtained.
2. Identify the four economic resources and the type of income associated with each.
3. Define opportunity cost and use the production possibilities curve to explain the
concept.
4. Predict the effects of changes in demand and supply on equilibrium price and
equilibrium quantity, and on the prices of substitute and complementary goods.
5.Explain the possible effects of inflation on real output and employment.
6. Explain Keynesian economics on unemployment in a capitalistic economy and the type
of policy government should pursue.
7. Describe the specific fiscal policies that can be used to reduce unemployment, and the
specific policies that can be used to reduce inflationary pressures.
8. Describe the specific monetary policies the Federal Reserve should use to reduce
unemployment and the specific policies it should use to reduce inflationary pressures in
the economy.
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