ECON 100.001 and ECON 100.002
Principles of Macroeconomics
Department of Economics
American University
Instructor: Gabriela Mundaca
Office: Roper 209
e-mail: mundaca@american.edu
Office Hours:
Wed: 10am – 12pm
Wed: 1.00pm – 3.00pm
Teaching Assistant: Francois P. Kabore
e-mail: fk7625a@american.edu
Office Hours: Th: 2.30pm-4.30pm in Roper 121
Recitation Hours: Th: 5.15pm-6.15, Katzen 112
Th; 6.30pm-7.30, Katzen 112
Course Objective
We will study the whole market economy. We will analyze how people make purposeful
decisions with scarce resources. In comparison to microeconomics that usually focuses on
the workings of one market, we will focus on the economy as a whole or at the aggregate
level. We will study economic growth, recessions, unemployment, inflation, and interest
rates, international trade, the causes and effects of trade, budget deficits, and causes, effects
and remedies to credit crunches and financial crises. This course will give you a better
understanding of the changes in an aggregate economy and the role of good economic
policies in driving economic growth and reducing unemployment.
Forms of Teaching
The course presents theories on the above topics, but also empirical evidences around the
world and exercises to provide the students the necessary skills to analyze countries’
economic problems at the aggregate level. The course is mostly lecture style with some
discussion of topics through exercises, data and a variety of articles. These articles will come
from for example Newspapers and Newsletters from Monetary Policy Commissions at
Central Banks around the world. The lectures will give enough background to solve, analyze
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and evaluate the problems sets, the different issues discussed in Newspapers, and in general,
macroeconomic problems of real life.
The lectures, links to most of the required articles (to read) and problem sets will be available
at AU “Blackboard”. Make sure that you check regularly the “Blackboard”. Announcements
will be published there as well.
To get the best of the course, it is suggested that you attend classes and the TA’s recitation as
much as possible, and read the required book and readings and the lectures notes regularly as
all of them are foundations for future lectures. Lecture’s notes are for supporting and not for
substituting the reading material including the text book. Try as much as possible to practice
the exercises given in the text book.
Grading
The students will be responsible for four closed-book exams: 3 midterms and one final, and
four homeworks. The lowest midterm exam grade will be dropped. Each exam will make
25% of the total grade. The homeworks are due at the beginning of the class. Late
homeworks will not be accepted. To have you homework graded, you need to present your
work neatly, clearly label each problem and give sufficient explanation and interpretation of
your results. The final grade will be based upon the following criteria:
Class participation (5%)
Homeworks (20%)
Exams 75%
Constructive class participation, and attending class and TA recitations (at least 8
recitations) will be all evaluated by the instructor over the term and used in borderline cases
to determined the final grade.
Exams and homeworks require analytical work and not just memorization of topics or
models.
Course Materials
Required book:
“Principles of Macroeconomics” by N. Gregory Mankiw, 5th edition, South-Western
Cengage Learning.
The core materials for the course consist of the above book, articles from Newspapers and
Central Banks, and lecture notes. Make sure to have read all the corresponding materials, not
least the problem sets, before you take the exams.
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I strongly recommend to all students to read often:
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The New York Times
Washington Post.
The Wall Street Journal
The Financial Times
The Economist
I will publish in the website of the course a file called Link that will contain relevant links to
important institutions, books, data relevant to the course.
South-Western Cengage Learning provides a website, which accompany your textbook.
There you will find practice exercises, quizzes to test your understanding of the course
material.
Exam Policy
Exams are closed books and comprehensive. Absences from exams are allowed only for
validated medical reasons. Unexcused absences from exams will result in a zero score in the
calculation of the final grade. All exams will be administrated in strict observance of the
University Honor Code, without compromise or exception.
Course Program
1. Introduction. Basic Definitions in Economics. How Economists think. Gains from
Trading: Week 1: January 13th and 16th.
Chapters 1, 2 and 3 in “Principles of Macroeconomics” by N. Gregory Mankiw
2. The Market. Demand and Supply
Weeks 2 and 3: January 23rd and 27th.
Chapter 4 in “Principles of Macroeconomics” by N. Gregory Mankiw
HOMEWORK #1: Due Thursday, January 29th.
3. Measuring a National Income
Week 3: January 30th.
Chapter 10 in “Principles of Macroeconomics” by N. Gregory Mankiw
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MIDTERM #1: Tuesday, February 3rd
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4. Measuring the Cost of Living
Week 4: February 6th.
Chapter 11 in “Principles of Macroeconomics” by N. Gregory Mankiw
5. Production and Growth
Week 5: February 10th and February 13th.
Chapter 12 in “Principles of Macroeconomics” by N. Gregory Mankiw
6. Saving, Investment, and the Financial System.
Week 6: February 17th
Chapters 13 in “Principles of Macroeconomics” by N. Gregory Mankiw
HOMEWORK # 2: Due Friday, February 17th.
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MIDTERN # 2: TUESDAY, FEBRUARY 20TH.
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7. The Monetary System
Week 7: February 24th and 27th
Chapters16 in “Principles of Macroeconomics” by N. Gregory Mankiw
8. Unemployment. Money Growth and Inflation
Week 8: March 3rd and 6th
Chapters 15 and 17 in “Principles of Macroeconomics” by N. Gregory Mankiw
HOMEWORK # 3: Due Friday, March 6th.
MIDTERM # 3: Tuesday, March 17th.
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9. Aggregate Demand and Aggregate Supply
Weeks 10 and 11th: March 20th and March 24th
Chapter 20 in “Principles of Macroeconomics” by N. Gregory Mankiw
10. Monetary and Fiscal Policy
Weeks 11th and 12th: March 27th and 31st
Chapter 21 in “Principles of Macroeconomics” by N. Gregory Mankiw
11. The short-run trade-off between inflation and unemployment
Weeks 12th and 13th: April 3rd and April 7th
Chapter 22 in “Principles of Macroeconomics” by N. Gregory Mankiw
12. The Macroeconomics of Open Economics
Weeks 13th and 14th: April 10th, 14th and 17th
Chapters 18 and 19 in “Principles of Macroeconomics” by N. Gregory Mankiw
13. Basic tools of finance. Financial Crises
Week 15th: April 21st and 24th
Chapters14 in “Principles of Macroeconomics” by N. Gregory Mankiw AND
LECTURE NOTES on Financial Crises.
14. Short revision of the course
April 28th
HOMEWORK # 4: Due Tuesday, April 28th
FINAL EXAM: May 1st
This syllabus may be subject to changes, i.e. we may take either longer or shorter time
to finish a topic or I may need to change my office hours. If any change occurs, it will
be posted in the Webpage of the course and/or announced in class. You are responsible
of becoming aware of those announced changes.