Villanova University School of Business Introduction to Macroeconomics ECO-1002-020 Summer 2009 Mary Kelly, Ph.D. Class Meetings in Bartley 2074: MTWTF 10:30 AM to 12:30 PM How to contact me: Office: Bartley 2016 Office phone: 9-6445 Office Hours: After class or by appointment Email: mary.kelly@villanova.edu Course Description: This course is an introduction to the study of how economic forces and policies affect the working of the economy as a whole. Topics addressed include the determination of national income and output, unemployment and inflation, monetary and fiscal policies, and international trade and policies. Course Objective: At the conclusion of this course, students should be able to evaluate and discuss macroeconomic issues and the consequences of various policy actions. Method: Lecture and Discussion Required Textbook: Macroeconomics by Campbell R. McConnell, Stanley L. Brue, and Sean L. Flynn, 18th edition Other readings: Selected chapters from the Economic Report of the President – Available online at www.gpoaccess.gov/eop/index.html. Articles pertaining to macroeconomic issues from the Wall Street Journal The Wall Street Journal is available for free throughout Bartley Hall. Articles from quarterly/monthly journals published by regional Federal Reserve Banks. These articles will be distributed via email or in class. You should be prepared for class. This includes reading the chapter and any corresponding material from assigned readings prior to coming to class. Grading: Requirements International Assignment Class Attendance/Participation (including WSJ discussions and mini assignments) Exams I (Chapters 1,2,3,5,6) II (Chapters 6 through 11) III (Chapters 12 through 15) FINAL (All Chapters) 35 35 35 55 July 06 July 13 July 20 July 27 200 Total Points 100-94 (188+points) 90-93 (180-186 points) 87-89 (174-178 points) 84-86 (168-172 points) 80-83 (160-166 points) 77-79 (154-158 points) Points Due Date(s) 20 20 A AB+ B BC+ 74-76 (148-152 points) 70-73 (140-146 points) 67-69 (134-138 points) 64-66 (128-132 points) 60-63 (120-126 points) Below 60 (120- points) C CD+ D DF Grading is determined based on the above criteria. There is NO EXTRA CREDIT offered in this course. Rounding up or down is based on attendance and class participation. International Economics Assignment: Each student will be asked to prepare an economic analysis on a country other than the United States. The analysis should include an assessment of current macroeconomic conditions of that country and an historical examination of economic data [GDP and GDP/capita, unemployment and inflation, trade policies, major exports and imports, recent fiscal and monetary policy actions, and significant socioeconomic issues]. Students will prepare a 20 minute presentation using Microsoft PowerPoint or other computerized visual aids and present their findings to the class. Students are required to submit a full bibliography listing all sources. The presentations should be informative and entertaining. Possible websites for information www.oecd.org www.worldbank.org www.imf.org Market Insight (S&P) is available through the Falvey library website (www.library.villanova.edu/vbl/). Access the “business databases” and then select “Market Insight (Standard and Poor’s).” Once there, select a country from the pull-down menu. Access the DRI report available from the left-hand margin of that page. Class Attendance/Participation: There are 20 points for class attendance/participation. Points are earned based on the quantity and quality of contribution to class discussions. Students who do not attend class or do not participate in discussions can expect to earn a significantly lower grade for the course. Wall Street Journal Discussions: At the beginning of each class, two students will be asked to lead a brief discussion of the top 4 to 5 macroeconomic topics appearing in the Wall Street Journal during the previous few days. Exams will include at least one current macroeconomic topic discussed in class. It is expected that students will display courtesy and respect for each other during class. Students are expected to arrive on time and to remain until the class ends. Unless it is an emergency, bathroom breaks should be taken before or after class. Please turn off all cell phones prior to the start of class. The computer is for coursework only. Please do not surf the web, check Facebook, or answer emails during class. Exams: There are four exams during the term, including a cumulative final. Exams must be taken on the scheduled dates. There will be no make-up exams. NO EXCEPTIONS! Integrity Policy: The Code of Academic Integrity of Villanova University addresses cheating, fabrication of submitted work, plagiarism, handing in work completed for another course without instructor’s approval, and other forms of dishonesty. For the first offense, a student who violates the Code of Villanova University will receive 0 points for the assignment. The violation will be reported by the instructor to the Dean’s Office and recorded in the student’s file. In addition, the student will be expected to complete an educational program. For the second offense, the student will be dismissed from the University and the reason noted on the student’s official transcript. Disability Statement: It is the policy of Villanova to make reasonable academic accommodations for qualified individuals with disabilities. If you are a person with a disability, please contact me after class or during office hours and make arrangements to register with the Learning Support Office by contacting 610-519-5636 or nancy.mott@villanova.edu as soon as possible. Registration is needed in order to receive accommodations. Course Outline: Date 6/26 Chapter(s) 1-2 6/296/30 3 7/017/02 5 7/02 7/06 7/07 6 7/08 8-9 7/09 10 7/10 11 7/13 7/14 12 7/15 13 7 Material Introduction to Economics Economic perspective The economizing problem Production possibility curve Economic systems The circular flow model introduced Articles from Economic Letter, Federal Reserve Bank of Dallas Understanding Markets Law of demand and supply Non-price determinants of demand and supply Market equilibrium Articles from Economic Letter, Federal Reserve Bank of Dallas The U.S. Economy and the World Private Sector – Consumer and Firms Public Sector Intro to International Trade Intro to Macro and Exam I review EXAM I (Chapters 1 through 6, except 4) Measuring Domestic Output (GDP) Access GDP data (www.bea.gov) Calculating GDP Nominal versus real GDP Economic Growth, Unemployment and Inflation Access business cycle data (www.nber.org/cycles.html) Access unemployment and inflation data (www.bls.gov) Economic growth (defined and measured) Labor productivity The business cycle Unemployment (defined and measured) Inflation (defined and measured) Relationships between Income and Consumption and Income and Savings Average propensity to consume and save Marginal propensity to consume and save Non-income determinants of consumption and savings The multiplier effect The Aggregate Expenditure Model (C+I+G+Xn) Equilibrium in the AE model Recessionary and inflationary gaps Exam II review EXAM II (Chapters 7 through 11) Aggregate Demand and Supply Economic Report of the President Relationship between price and real GDP Non-price determinants of AD and AS Equilibrium in the AD-AS model Fiscal Policy 7/16 14 7/17 15 7/20 7/21 16 7/22 18 7/23 19 7/24 7/27 Economic Report of the President Legislative mandates Expansionary and contractionary fiscal policy Built-in stabilizers Problems with fiscal policy Money and Banking – Supply and Demand for Money Functions of money Money supply definitions Money and Prices Recent developments in money and banking The Federal Reserve System The Banking System – Multiple Deposit Expansion How individual banks create money Money creation within the banking system EXAM III (Chapters 12 through 15) Monetary Policy and the Role of the Federal Reserve Minutes from the most recent FOMC meeting (www.federalreserve.gov/fomc/minutes/). Objectives of monetary policy Monetary policy tools Effectiveness of monetary policy Extended AD-AS Model SR versus LR aggregate supply Demand-pull and cost-push inflation Phillips Curve (SR versus LR) Current Issues in Macro Theory and Policy Classical versus Keynesian Monetarism Pulling it all together: Review/Analyze current U.S. macro conditions and how we got here. International Presentations and Semester Review FINAL EXAM (Chapters 1 through 20)