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SOUTHWESTERN MICHIGAN COLLEGE
Communications/Humanities/Social Science
Dowagiac, Michigan
COURSE SYLLABUS
Spring, 2004
COURSE TITLE: Macroeconomics
COURSE NO.: 201
SECTION NO.: 2101
CREDITS/CONTACTS:
Credit Hours:3
Lecture hours/weekly:3
INSTRUCTOR:
Kurt E. Erickson
Office Hours: By appointment only
Phone Number: 728-1221 Dowagiac Campus Only
E-mail: [email protected]
PREREQUISITE:
Math 100 strongly recommended.
COURSE DESCRIPTION:
Macroeconomics deals with the economy taken as a whole. Some of the
topics covered in this course are inflation, unemployment, business cycles,
national income accounts, budget deficits and the national debt, taxes,
aggregate demand and supply, the commercial banking system, and the
Federal Reserve. A major focus is on fiscal and monetary policies and how
they are used to manage the aggregate economy.
TEXTBOOK REQUIRED: MACROECONOMICS, 6th Edition, Roger A. Arnold, South-Western
Publisher/Thomson Learning, 2004, and the Study Guide.
OPTIONAL: Student Study CD-ROM
ADDITIONAL RESOURCES: Author's Web Page. This class is on SMC's Pipeline.
COURSE OUTCOMES:
1. Identify many of the consequences of scarcity.
2. Explain how changes in opportunity cost affect behavior.
3. Explain what it means to think like an economist.
4. Discuss how theory is used in economics.
5. Explain how and why economists use the ceteris paribus condition.
6. Identify the components of scientific thinking.
7. State the difference between macroeconomics and microeconomics and between positive and
normative economics.
8. Identify the purpose of exchange.
9. Explain the difference between ex ante and ex post exchange.
10. Discuss the difference between exchange and the terms of exchange.
11. Explain how consumers’ surplus and producers’ surplus can be used in economics.
12. Explain what a production possibilities frontier (PPF) is.
13. Use the PPF framework to discuss choices, opportunity costs, unemployment, economic
growth, efficiency, inefficiency, and more.
14. Explain how economic growth can resolve conflicts.
15. Identify the three economic questions every society must answer.
16. Identify the differences between the capitalist vision and the socialist vision.
17. Define demand, supply, the law of demand, and the law of supply.
18. Identify the factors that can change demand.
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Identify the factors that can change supply.
Explain how equilibrium price and quantity are determined in a market.
Work with supply and demand to predict prices.
Identify and discuss the effects of price ceilings and price floors.
Use supply and demand to explain market and no market behavior.
Apply the tools of supply and demand to everyday life.
Better explain how economists think.
Explain how the consumer price index (CPI) is computed.
Compute the inflation rate.
Convert nominal income to real income.
Explain the difference between a fixed-weighted price index and a chain-weighted price index.
Compute the unemployment rate.
Discuss the differences between frictional, structural, cyclical, and natural unemployment
rates.
32. Explain the job search process.
33. Compute gross domestic product (GDP).
34. Identify the various types of expenditures in the economy.
35. Compute real gross domestic product (Real GDP).
36. Compute national income, personal income, and disposable income.
37. Measure economic growth.
38. Explain why the aggregate demand (AD) curve slopes downward.
39. Identify the factors that can change aggregate demand.
40. Distinguish between a change in aggregate demand and a change in quantity demanded of Real
GDP.
41. Explain why the short-run aggregate supply (SRAS) curve slopes upward.
42. Identify the factors that can change short-run aggregate supply.
43. Explain how short-run equilibrium in the economy is established.
44. Identify the factors that can change the price level, Real GDP, and the unemployment rate.
45. Explain the difference between the short-run aggregate supply (SRAS) curve and the long-run
aggregate supply (LRAS) curve.
46. Identify the characteristics of a recessionary gap.
47. Identify the characteristics of an inflationary gap.
48. Identify the characteristics of long-run equilibrium.
49. Explain how an economy may remove itself from a recessionary gap.
50. Explain how an economy may remove itself from an inflationary gap.
51. Explain how the economy’s unemployment rate can be lower than the natural unemployment
rate.
52. Explain why Keynes believed the economy could get stuck in a recessionary gap.
53. Identify Keynes’ position on Say’s law, interest rates, prices, and wages.
54. Define a consumption function.
55. Explain what happens in the economy when total expenditures do not equal total production.
56. Explain why, according to Keynes, the economy could be in a recessionary gap and in
equilibrium, too.
57. Identify the difference between expansionary and contractionary fiscal policy.
58. Identify the differences between demand-side and supply-side fiscal policy.
59. Explain how fiscal policy can, under certain conditions, impact aggregate demand in the
economy.
60. Discuss the conditions under which expansionary fiscal policy is (is not) effective at removing
the economy from a recessionary gap.
61. State the conditions under which increases in the size of the budget deficit will (will not) raise
interest rates.
62. Explain how expansionary fiscal policy can, under certain circumstances, destabilize the
economy.
63. Discuss the relationship between changes in tax rates and changes in tax revenues.
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Discuss how money evolved out of a barter economy.
List and explain the functions of money.
Explain what gives money its value.
Define the money supply.
Explain why credit cards are not money.
Explain how banking developed.
Explain the role banks play in the money creation process.
Identify and discuss the functions of the Federal Reserve System.
Outline the structure of the Fed.
Explain how the monetary base is increased and decreased.
Identify the relationship between the monetary base and the money supply.
Define the money multiplier.
Explain how checks clear.
Identify and discuss the tools the Fed can use to change the money supply.
Explain the difference between the federal funds rate and the discount rate.
Explain the equation of exchange.
Make predictions based on the simple quantity theory of money.
Explain monetarism in an AD-AS framework.
Identify the causes of one-shot inflation.
Identify the cause of continued inflation.
Explain the difference between the liquidity, income, price-level, and expectations effects and
explain how each affects the interest rate.
Explain how the money market achieves equilibrium.
Outline the differences between the Keynesian and monetarist transmission mechanisms.
Explain why bond prices and interest rates are inversely related.
Explain how monetary policy may be used to cure inflationary and recessionary gaps.
Discuss the details of the activist-nonactivist debate in economics as it applies to monetary
policy.
Explain how monetary policy may be destabilizing.
Argue the pluses and minuses of a monetary rule.
Explain how a gold standard would work.
METHOD OF INSTRUCTION: Classroom interactive tutorials, cooperative learning groups on the study guide
problems, internet visits to author's web-page and tutorials. In class analysis of economic concepts.
Working on the problems at the end of each chapter of the textbook.
EVALUATION
METHOD:
There will be eight objective-type examinations (multiple choice, true/false, short-essay.) during the
semester plus one comprehensive final examination. These exams are provided by the publisher of the textbook and study
guide.
GRADING SCALE:
Each of the eight objective quizzes are worth 100 points, for a possible total of 800 points and the comprehensive final
examination is also worth 100 points for a total of 900 points for the semester. The final course grade is determined from
the following scale: 810 points or more A, 720 - 809 B, 630 - 719 C, 450 -629 D, fewer than 450 F. The maximum
number of points a student may earn prior to the final exam is 760. Failure to take the final exam will result in a
maximum letter grade D.
ATTENDANCE
POLICY:
Students are expected to attend all scheduled class sessions. If, because of circumstances beyond your
control you cannot attend a class session, you should take necessary steps to obtain class information from a classmate able
to attend. To encourage class attendance, you will be awarded 1 point, which will count toward your final grade, for each
class attendance. Attendance in class is your responsibility, and is highly recommended for successful performance.
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TESTING POLICY:
Some regularly scheduled examinations may offer "bonus" points. To encourage
you to take the exam when scheduled, make-up exams will not offer these "bonus" points. Make-up exams are
taken at SMC's Testing Center, either the Dowagiac or Niles campus.
OTHER COURSE
EXPECTATIONS: The Course Assignments at the end of this syllabus will be followed as closely as possible.
However, it is subject to change. It is your responsiblility to attend class and be aware of any change that it may
be necessary to make.
NOTICE: Information in this syllabus, was to the best knowledge of the instructor, considered correct and
complete when distributed for use at the beginning of the semester. The instructor, however, reserves the
right, acting within the policies and procedures of Southwestern Michigan College, to make changes in
course content or instructional techniques.
HONESTY POLICY
Cheating or plagiarizing will absolutely not be tolerated at Southwestern Michigan College. Any student
found cheating or plagiarizing material in any manner may be assigned a failing semester/session grade in
this course. A second such incident while at SMC could result in suspension or expulsion from the
institution. A student found in violation of this section of the syllabus will not be allowed to drop this course.
Additional detail regarding cheating and/or plagiarism may be found elsewhere in this syllabus.
COURSE ASSIGNMENTS SECTION 2101
MAY 12-13:
MAY 17:
MAY 18:
MAY 19:
MAY 20-24:
MAY 25:
MAY 26:
MAY 27:
JUN 1:
JUN2:
JUN 3:
JUN 7:
JUN 8-9:
JUN 10:
JUN 14-15:
JUN 16:
JUN 17-21:
JUN 22,23:
CH 1: WHAT ECONOMICS IS ABOUT
CH 2: TRADE, TRADEOFFS, AND ECONOMIC SYSTEMS
TEST 1
CH 3: SUPPLY, DEMAND, AND PRICE: THE THEORY
CH 4: APPLICATION OF SUPPLY AND DEMAND
TEST 2:
CH 5: MACROECONOMIC MEASUREMENTS, PART I:
PRICES AND UNEMPLOYMENT
CH 6: MACROECONOMIC MEASUREMENTS, PART II:
GDP AND REAL GDP
TEST 3:
CH 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY
CH 8: THE SELF-REGULATING ECONOMY
TEST 4:
CH 9: ECONOMIC INSTABILITY: A CRITIQUE OF THE
SELF-REGULATING ECONOMY
TEST 5:
CH 10: FISCAL POLICY
CH 11: MORE ON GOVERNMENT SPENDING AND TAXES: BEYOND
FISCAL POLICY
TEST 6:
CH 12: MONEY AND BANKING
CH 13: THE FEDERAL RESERVE SYSTEM
TEST 7:
CH 14: MONEY AND THE ECONOMY
CH 15: MONETARY THEORY AND POLICY
TEST 8:
REVIEW FOR FINAL EXAM
FINAL EXAMINATION AS SCHEDULED
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