ECON 2105: PRINCIPLES OF MACROECONOMICS
Fall Semester 2012
(Saturday, 12:00-3:00 PM)
Instructor: Shaig Adigozalov, PhD
Bachelor of Business Adminstration
Azerbaijan University
AZ 1102, Baku, R.Safarov 17
Telephone: 055 206 61 08
E: mail: shadigozalov@yahoo.com
1. Course General Description
This course is intended to provide descriptive analysis of the structure and functioning
of
the
economy.
Emphasizes
national
income,
problems
of
inflation
and
unemployment, the role of government, money supply, and economic growth.
The primary aim of this class is to introduce the economist’s way of thought. In
particular, we investigate many other countries adopted a market based approach to
managing the fundamental economic problem of scarcity and unlimited wants. This
intuition is dependent upon understanding the nature of the consumer and firm. We
flesh out the many shortcomings of the market based system such as income
inequality, unemployment, inflation and the business cycle. We then reason through
the increased role of the government to alleviate the consequences of such market
failures.
Successful Students:
Will be able to: (1) assess the impact of current events using market analysis, (2)
explain how market based economies evolve, (3) explain the role of competition and
the role of the government in market based economies, and (4) offer various policy
options to alter the state of the economy.
2. Credit hours: 3.0 credits
3. Course Pre-requisites:
The requirements for the course include attending and
participating in all classes as well as completing homework and projects of time. In
addition, there will be occasional mini-quizzes given at the end of class. The
following is a breakdown of the contributions to your final grade:
1

Quizzes 10%

Exams 45%

Project 15%

Homework 20%

Participation 10%
Quizzes:
These are primarily brief, unannounced, in-class assignments designed to evaluate
your master of a small section of the course material. Quizzes typically contain 5-7
true/false, multiple choice, and/or fill in the blank questions. Occasionally you will be
asked to construct a graph or respond to a relatively short essay question. You will
have a short time to complete them on your own (usually 5- 10 minutes) and you will
be allowed to use your notes, textbook, and a calculator.
Exams:
There will be three exams. The exams will typically consist of multiple choice
questions, short answer questions, and one or two longer essay questions. The material
will be comprehensive covering all required readings and lectures. You will be
permitted to use one sheet of paper (8.5”x11”) and a calculator, but no other notes or
textbooks are allowed.
Project:
Students are expected to submit an economic analysis of a current affairs issue. A
typical project is a well-organized 2-3 page discussion of the key issues surrounding
the issue. The project must also include a brief review of the economic importance of
these issues by applying the economic concepts covered thus far in the course. The
intent of the project is to hone the students’ economic intuition and critical thinking
abilities. While the source for the project is open to the student’s choice, some
discretion must be maintained to find articles suitable for such analysis. Recommended
sources are listed on page 1.
Homework:
There will be (almost weekly) homework assignments given Wednesdays. Most
assignments will be due the following Wednesday; however, some assignments will
require more time to complete. Homework is to be handed in at the beginning of each
class and will not be accepted late or by email. Homework as well as quizzes will
generally be handed back no later than one week after they have been handed in. Each
homework assignment is worth 2 points and the grading is as follows: 2 points are
awarded if all the problems have been attempted AND all work is shown, 1 point if
only some of the problems have been attempted and/or if you do not show all of your
2
work, 0 points if the assignment is late or not handed in at all. Note that the homework
grade does not depend on whether you get the answers correct, but rather on whether
you have made a good faith effort to complete the assignment. While correct answers
are important, the goal of these homework assignments is to give you practice at
solving the types of problems that you will see on quizzes and exams.
Participation:
Attendance is a minimal requirement to receive full credit for class participation. In
addition, students are expected to participate actively in the learning process. Quality
participation may be achieved by asking intelligent questions, and by offering wellreasoned input, both during lectures and discussions. However, do not let the prior
statement discourage you from participating. It is okay to be wrong; in fact, we often
learn more from our wrong answers than from our right ones. Questions are only
stupid when the person asking has no serious interest in learning the answer.
4. Required Computer Skills Prerequisites: Microsoft Windows, Microsoft Office
(Word, Excel and Power Point 2003)
5. Required Text Book
N. Gregory Mankiw. Principles of Macroeconomics, fifth edition. ISBN-10: 0324589999,
Publisher: Wiley Publishing Inc. ISBN: 0-7645-4120-X
6. Important dates for course:
DATE
LECTURE TOPIC
CHAPTER(S) Due
Ten Principles of Economics
Chapter 1
Thinking Like an Economist
Chapter 2
Interdependence and the Gains from Trade
Chapter 3
-Sep
The Market Forces of Supply and Demand
Chapter 4
-Sep
Measuring a Nation's Income
Chapter 10
-Oct
Measuring the Cost of Living
Chapter 11
-Oct
Production and Growth
Chapter 12
-Oct
Saving, Investment, and the Financial System
Chapter 13
-Sep
3
HW1
HW2
-Oct
Unemployment
Chapter 15
-Nov
The Monetary System
Chapter 16
-Nov
Money Growth and Inflation
Chapter 17
-Nov
Mid-term
-Nov
Open-Economy Macroeconomics: Basic Concepts
Chapter 18
-Dec
A Macroeconomic Theory of the Open Economy
Chapter 19
-Dec
Aggregate Demand and Aggregate Supply
Chapter 20
- Dec
The Influence of Monetary and Fiscal Policy
Chapter 21
- Dec
REVIEW FOR FINAL
- Dec
HW3
HW4
HW5
FINAL EXAM
-Mar
7. Instruction Evaluation

You are required to complete an Instructor Evaluation Form for this course (you
may also choose not to complete the evaluation, but you must indicate so.)

If you need to discuss grade-related issues after the final exam/test, please
contact me only after AU has published your course grades (timing when the
evaluation is still in the progress).
8. Letter Grade Policy
Letter grade
A
AB+
B
BC+
C
CD
Total points
93-100
90-92.9
87-89.9
83-86.9
80-82.9
77-79.9
73-76.9
70-72.9
60-69.9
4
F
Below 60
9. Exams (mid-term and final):
The tests will be based on the assigned readings as well as the contented presented
by me and discussed with students in sessions.
10. Method of Instruction:
Various method of teaching will be employed to encourage proactive involvement
of students and make learning process successful. Mostly employed methods and
techniques to expect are discussions, lectures and problem-solving.
11. In-class quizzes:
There will be six in-class quizzes to grade the level of student’s preparedness to the
classes. Students who receive low grades for quizzes will be considered as students
who does not follow class material as well as do homework.
12. Home works:
Instructor will assign five home-works, each of which must be completed
independently by students. Students are encouraged to form group discussions to
analyze home-works but are expected to honestly turn in their individual homework. Home-works are expected to be turned in as hard copies, no faxes and emails
are accepted.
13. E-mail:
Students can contact me for arranging meetings and asking urgent questions by email. But I encourage them to contact me in person to discuss substantive matters
such as a class absence, exams, or grade assignments.
14. Office hours:
My office hours are Saturday at 12:00 A.M. – 1:00 P.M. (Other times: Yes, but by
appointment only).
15. Policy on Class Attendance

Students are expected to attend all scheduled classes and take all tests

If the student misses a class, the student is still responsible for catching up
on the material covered in the absence of that student before coming to the
next class session. Therefore, it is responsibility of the student to arrange
with student colleagues to obtain notes if he or she misses a class or classes.
5

Excessive absence: Four or more classes. Depending on the circumstances,
the instructor may initiate some kind of penalty with dean’s office.
16. Policy on Make-Ups

Mid-term and final: do not miss them. There are no exceptions for those.

Home-works are due on the dates announced and late submission means no
grade for that home-work.

Requests for make-ups may be granted only under exceptional
circumstances.

Avoid requests for reasons of personal convenience;

Any make-up exams, if granted, must be taken prior to the next meeting of
the class.

If you miss a test without prior notice or arrangement, no grade (zero
grades) is automatically assigned to the missed test.
17. Class discipline

Please arrive on time.

Do not eat food in class: please use lounge areas.

Cell phones, e-mails, and any possible other electronic devices must be
turned OFF while in class and during the test.
18. Academic dishonesty
Azerbaijan University has no tolerance for acts of academic dishonesty. The
responsibilities of both students and faculty with regard to academic dishonesty are
defined by education policy of Azerbaijan University. By teaching this course, I have
agreed to observe the entire faculty responsibilities described in that document. By
enrolling in this class, you have agreed to observe all of the student responsibilities
described in that document. Academic dishonesty in this course includes copying or
collaborating during an exam, discussing or divulging the contents of an exam with
another student who will take the test, and use of homework solutions from another
students.
COURSE DETAILS
Specific objectives of the course:
I expect the students to learn the following skills and knowledge upon successful
completion of the course:
1. Introduction & Ten Principles of Economics:
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o how people make rational decisions in the market place
o how people interact to organize economic activity
o how the economy works as a whole
2. Supply, Demand and Government Policies (price ceilings, price floors, taxes):
o the effects of government policies that place a ceiling on prices.
o the effects of government policies that put a floor under prices.
o how a tax on a good affects its price and the quantity sold.
o how the burden of a tax is split between buyers and sellers.
3. Markets and Welfare: Consumers, Producers and the Efficiency of Markets. To
understand:
o the link between buyers’ willingness to pay for a good and the
o demand curve.
o how to define and measure consumer surplus.
o the link between sellers’ costs of producing a good and the supply
o how taxes reduce consumer and producer surplus.
o the meaning and causes of the deadweight loss from a tax.
o how tax revenue and deadweight loss vary with the size of a tax.
4. International Trade (the gains from trade specialization, absolute and comparative
advantage, opportunity cost):
o determinants of trade
o gains and losses from trade
o arguments for open trade
o arguments for restricting trade
5. Measuring Gross Domestic Product (GDP):
o the expenditure approach to GDP accounting
o the income approach to GDP accounting
o the shortcomings of GDP
o price indices
o real vs. nominal GDP
6. Cost of Living (consumer price index, inflation)
o consumer price index (CPI)
o the CPI basket of goods
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o measuring inflation
7. The Real Economy in the Long-Run: Production and Economic Growth, Effects of
Public Policy.
o how much economic growth differs around the world.
o why productivity is the key determinant of standard of living.
o the factors that determine a country’s productivity.
o how a country’s policies influence its productivity growth
o the meaning of the “saving” and “investment” as national accounts
8. Unemployment (job search, minimum-wage laws, unions and collective
bargaining, efficiency wages).
o how employment is measured
o frictional and structural unemployment
o minimum wage laws
o unions and collective bargaining
o theory of efficient wages
9. Money and Prices in the Long-Run: The Monetary System (FED, banks and
money supply).
o the meaning of money and the functions of money
o how banks create money
o the money multiplier
o bank regulations
10. Money Growth and Inflation (classical theory of inflation, costs of inflation).
o the classical theory of inflation
o the effects of monetary policy
o the “velocity” of money
o the quantity theory of money
18. Open Economy Macroeconomics (international flows of goods and capital, real
and nominal exchange rates, purchasing-power parity – PPP).
o the international flow of goods and services
o net capital outflow
o saving, investment and their relation to international flows
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o real exchange rates
o nominal exchange rates
o theory of exchange rate determination
19. Macroeconomic Theory of the Open Economy
o how to build a model to explain an open economy’s trade balance and exchange
rate.
o how to analyze the effects of government budget deficits.
o how to analyze the macroeconomic effects of trade policies.
o how to analyze political instability and capital flight.
20. Aggregate Demand and Aggregate
o three key facts about economic fluctuations
o how to explain short run fluctuations
o the assumptions of classical economic theory
o aggregate demand (AD) & aggregate supply (AS)
o shifts in the AD and AS curves
21. Monetary and Fiscal Policy.
o how monetary policy influences aggregate demand
o how fiscal policy influences aggregate demand
o how to use fiscal and monetary policy to stabilize the economy
22. Short-run Trade-off between Inflation and Unemployment (Phillips curve, costs
of reducing inflation).
o the Phillips Curve
o supply shocks and the Phillips Curve; the role of expectations
o the cost of reducing inflation
o the idea of “rational expectations”
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