INTRODUCTION TO MACROECONMICS
Econ 201
Instructor: Doug Nelson
Office: 213L
E-Mail: DNelson@scc.spokane.cc.wa.us
Phone: 533-8902/466-3185
Office Hours: 1230 – 1500
or by appt.
Text: Economics: A Contemporary Introduction. William A. McEachern
Course Overview:
Economics is the study of how people choose to use their limited resources to produce, exchange, and
particularly, consume goods and services. Economics then is the study of the decision process involved in
choosing the most efficient way to allocate our scarce resources to satisfy our wants to the maximum extent
possible. Macroeconomics studies some of the most important issues of our nation -- issues affecting every facet
of our daily lives -- particularly, income, inflation, unemployment, interest rates, and the business cycle. We will
also investigate the role of government in determining the economic goals of society. Consequently, any study of
macroeconomics is far from apolitical as we examine such questions as: Should the government be involved (if
at all), and if it should, what policies should the government adopt and what are the consequences to society.
College-Wide Abilities:
SCC faculty has identified four ability areas that we believe all students need to succeed beyond their formal
education: responsibility; problem solving, global awareness; and, communications. The course objectives
indicate which abilities are being taught specifically in this class. A listing of department transfer equivalencies
is attached.
4-year Transfer Equivalency:
Econ 201 is a transfer course … a course that will be accepted by any 4-year university/college on the quarter
system. Normally, Econ 201 is taken during the sophomore year; consequently, I will teach Econ at a
“sophomore in college” level. In addition, I have constructed Econ 201 to prepare you for a smooth transfer to
the upper division (300 and 400 level or intermediate level) courses at your four-year school. A listing of
Washington universities accepting SCC’s Econ 201/202 sequence is attached.
Course Objectives:
• For each student to develop the ability to understand the macroeconomic process of Problem – Policy –
Result. Using this process each student should be able to analyze current national economic problems and
to understand the impact of government policy (or inaction) on growth, income, employment, inflation,
and interest rates.
• To achieve an understanding of the economic problems that challenge economists, policy makers and the
nation/world as a whole. The problems addressed in this course will be unemployment, inflation, growth,
and recession. (Responsibility and Global Awareness)
• To achieve a working understanding of the two major policy (monetary and fiscal) tools used by
economists and policy makers to solve macroeconomic problems. (Responsibility and Problem Solving)
• To achieve an understanding of the principle macroeconomic theories (Classical, Demand-side, and
Supply-side) used to interpret the impact of monetary and fiscal actions on the macroeconomic problems
facing a region/nation/world. (Responsibility, Problem Solving, and Global Awareness)
• To develop the ability to analyze and interpret economic data. (Problem Solving and Communications)
• To learn to apply the tools of economic analysis to real economic issues and problems. (Problem Solving
and Communications)
• To become aware of political, ethical, and philosophical issues related to economic problems.
(Responsibility, Problem solving, Global Awareness, and Communications)
• To prepare transfer students for the intermediate level of economics they will need to complete their
Bachelor’s degree.
Course Notes:
Here are a few points to consider as you take on the challenge of economics (micro or macro).
ECONOMICS IS NOT A SPECTATOR SPORT!!!!!!!
Economics is a VERY DIFFICULT course … it ranks right up there with the likes of calculus. (In fact, at the
300 and 400 level of economics, calculus is a prerequisite at most 4-year colleges and universities). To be
successful in economics, YOU must practice economics by YOU working economic problems … just
watching me work issues and problems will only result in frustration and disappointment. The primary
source of economic information for this course is the material I present in class. As a result, first, my course flow
does not follow the book (i.e. I skip around the book), but we do cover all the applicable concepts (as opposed
to the pages) involved; and second, my discussion does not religiously follow the text … I will use different
words, different terms, and different examples to help you come to an understanding of needed economic
principles. With this said, the book is still a very important study aid and resource to understanding the
material presented and discussed in class. I view the book as a resource to help understand the material
presented in class and not be the course in and of itself … if you want a course that explicitly follows the book, I
urge you to consider another section or take the on-line course. In the past courses, my students have found the
lectures crucial in preparing for “The Test” in addition to reading the book. If you must miss class for
whatever reason, I strongly encourage you to get the lecture notes from a colleague. Finally, economic questions
and problems are extremely application oriented – you will be required to apply the principles involved as
opposed to merely defining/regurgitating a term or definition presented. As a result, most successful
students have found that working “practice” problems, -- either the practice tests and problem sets I provide, or
problems from the book or study guide -- have made the difference between an “A” and some other result.
Finally, a peculiarity of mine is to allow you to practice responsible decision making (do the benefits outweigh
the costs – and – can you live with the consequences of your choice) by not requiring you to attend class ... if you
can get your “A” by just showing up for the tests.... that’s fine with me. However, history continues to prove that
90% of students who miss more than 5-7 classes have not successfully completed the course … i.e., they
flunked. One last thought ... I am not a fan of cell phones. In fact, I am neanderthal enough to not even own
one!! While a potentially useful device, I find their actual use rude and boorish. Consequently, if your opinion
differs from mine ...and it probably does ... put that thing on vibrate for the duration of class -- and, if you happen
to find yourself shaking during class, leave the room before answering it.
Course Evaluation:
I will determine your grade by assessing your performance on the following:
Test I
Test II
Test III
Test IV
Final Exam
17.5%
17.5%
17.5%
17.5%
“30%”
Each test will be made up of two parts: 1. 25-30 multiple-choice questions … the multiple-choice section of the
test will be closed book worth 60% of the test; and, 2. a short answer problem set. The problem set is
specifically designed to think about, and apply, economic principles to “real world” economic problems and
issues. The problem sets will require critical thought and analysis … you will not “find” the answers by
merely looking up paragraph x on page y. The problem set portion of the test will be open note-open book-open
friend … in fact, I encourage you to form study groups in answering the problem set questions. The multiplechoice portion of the test will be scored by the Scantron machine … you will need to provide your own
Scantron for each test and the final. In addition, once the class has reviewed a test, the test may not be
made up without prior approval. The problem set will be handed out several days prior to the multiple-choice
section and will be due the day of the multiple-choice section !!!! Failure to turn in the short answer will
earn you a zero (0) for 40% of that test. Because the problem set is passed out several days in advance,
skipping the test or getting “sick” on test day does not change the due date of the problem set … it will still
be due when the multiple choice test is handed out!!! Once again, if you know a particular due date will
pose a problem or conflict … I NEED TO KNOW THIS BEFORE THE DUE DATE – NOT AFTER!!! If
you are truly sick, send me the problem set by fax, e-mail attachment, runner, or even carrier pigeon if necessary
to get it here on time… whatever you do… don’t leave me in the “dark” as to your intentions to complete the
assignment. An additional practice of mine in all the courses I have ever taught is to make the weight of the Final
Exam -- which will be comprehensive -- negotiable. Why? Because, economics is a building block course....
and, since some folks are a little slower than others in laying their foundation, I like to provide an opportunity to
repent (or recover) if “ it all comes together” at the end of the quarter. Therefore, if you earn an “A” (defined as
90% or higher) on the final exam, you will receive an “A” (3.5-4.0) for the course. If the final is less than an
“A”, then the final will be worth the advertised 30%.
Grade Cuts and Percentages
To pass this course, (.7 or higher), you must obtain a cumulative score of 60% or higher. To earn university
transfer credit you must obtain a cumulative score of 70% or higher. For scores between 70%-100% and 60%69%, I will assign grades using a modified curve system based on course percentage and course ranking. The
curve will not exceed 10 points
and will be calculated after the final exam. Cumulative scores between
70%-100% will earn grades between 2.0 and 4.0 while cumulative scores between 50%-69% will earn grades
between .7 and 1.9.
While I do curve the final course grades … YOU MUST GET AT LEAST A 50% “ON YOUR OWN” (i.e.
NO CURVE) TO PASS!!!!!
Grade Cuts (After Curve):
A
%
99-100
97-98
95-96
93-94
91-92
90
B
Grade
4.0
3.9
3.8
3.7
3.6
3.5
%
89
88
87
86
84-85
83
82
81
80
Grade
3.4
3.3
3.2
3.1
3.0
2.9
2.8
2.7
2.6
C
%
Grade
78-79
2.5
77
2.4
76 2.3
64
74-75
2.2
72-73
2.1
71-70
2.0
69
1.9
68
1.8
67
1.7
D
%
66
65
Grade
1.6
1.5
1.4
63
62
61
60
57-59
54-56
50-53
1.3
1.2
1.1
1.0
0.9
0.8
0.7
While I do curve the final course grades … YOU MUST GET AT LEAST A 50% “ON YOUR OWN” (i.e.
NO CURVE) TO PASS!!!!!
One final thought on grades … in the “real world”, especially the “real” business/financial world there are no
mulligans, time-outs, do-overs, or extra credit. So it is with Econ 201 … with one exception: the Final. The final
is your main line of defense to make up for any and all earlier indiscretions – once again, an A on the Final will
automatically earn you an A in the course. My philosophy towards Z grades parallels my attitude towards
extra credit … I do not believe in them. Granted, emergencies do arise – and if one comes up, I am very
willing to work out a way to finish the course after life has calmed down. However, if you tried to coast to the
minimum or forgot to drop the course by 19 Feb … welcome to the real world of choices and consequences.
Syllabus:
I’ve divided the course up into subject blocks. We will not move on to the next block until the class as a whole
has a working familiarity with the current block. As a consequence, the timing of the course will be extremely
flexible. You will always have at least one class notice to adjust to any changes.
Syllabus:
Block
Date
Topic
Pages Covered
1
1-6
Class Admin and intro
1
1-7
Definition of Econ
Themes of Economics
Nelson’s Law of Greed
Production Possibility Frontier
Importance of Models
1-9
26-30
Course Syllabus
34-38
2
1-8
Law of Demand
45-52
2
1-9
Law of Supply
52-55
2
1-10
Equilibrium
55-68
3
1-13
Macroeconomic Problem
Business Cycles
426-432
3
1-14
Circular Flow Model
Gross Domestic Product
4, 70-87
468-476
3
1-15
Problems with GDP
National Income Accounting
476-480
489-491
4
1-16
What is Employment/Unemployment
493-502
4
1-17
Definition of Employment/Unemployment 493-502
5
1-21
Price Indexes
480-485
5
1/22-23
What is Inflation
Kinds of Inflation
502-511
1-5
1-24
Test 1
1-5
1-27
Review Test 1
6
1-28
What is Money
History of Money
Kinds of Money
6
1/29-30
Supply and Demand for Money
Interest Rates
645-652
603-610
625-629
6
1-31
Quantity Theory of Money
Monetary Policy
654-663
7
2/3-5
The Federal Reserve
Monetarization of Debt
610-621
629-638
7
2-6
Federal Reserve Options and
Monetary Policy
638-641
8
2-7
Monetary Policy and Classical Theory
Lecture
6-8
2-10
Test 2
2-11
Review Test 2
9
2-12
History of Classical Model
9
2-13
Output = Income
Keynesian Equilibrium
9
2-14
Keynesian Equilibrium
9
2-18
Keynesian Cross
515-533
538-542
551-552
10
2-19
Government to the Rescue
Demand Side Policy
Keynesian Gaps
587-597
581-584
11
2/20-2
Multipliers
516-520
542-546
599-601
12
2-24
Fiscal Policy
581-597
693-707
2-25
Review
9-12
2-26
Test 3
9-12
2-27
Review Test 3
13
2-28
History of Keynesian Economics
437-443
13
3-3
Aggregate Demand
547-553
13
3-4
3-5
Demand Side Economics
Natural Rate Theory
547-553
561
436-437
472-476
515-533
515-533
14
3-6
Aggregate Supply
560-577
14
3-7
Supply Side Policy
584-587,593
666-667
14
3/10-11
Phillips Curve
680-687
13-14
3-12
Test 4
1-14
3-13
Review Test 4
3-14
Course Review
1-15
3-18
Final Exam for the 0830 section
1-15
3-20
Final Exam for the 0730 section