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Principles of Macroeconomics [HA HU3A]
ISUP Course 2013 - Copenhagen Business School
Department: ISUP
Course level: Undergraduate_X__
Graduate___
Study board: (ISUP will enter the appropriate study board for proposal review)
Course Main Category:. 17. Economics, Macro Economics and Managerial Economics, etc.
Course Secondary Categories:
Credits: 7.5 ECTS
Instructor: Bradley K. Hobbs, Ph.D.
E-mail address: [email protected]; [email protected]
Course coordinator: Patricia Plackett
Course prerequisites and restrictions:
It is recommended that students have successfully completed a course in basic algebra. No other
prerequisites are required.
Course content, structure, and teaching:
The Principles of Macroeconomics is the introductory, foundation course for all of macroeconomic
theory. It provides the framework for subsequent intermediate macroeconomic theory courses and
is any student's introduction to the analysis of economies at the aggregated (national or state)
level.
Macroeconomics is the study of the behavior of an entire economy aggregated across all of the
individual decision-making units. It deals primarily with those factors affecting production,
employment, and price levels. Topics which we will cover include: economic growth, business
cycles, the national debt, interest rates, government spending, the measurement of economic
aggregates, monetary policy, and fiscal policy. We will also introduce international economics and
polciies along with international finance.
There is relatively-wide agreement on the goals of macroeconomic policy: growth in real output, full
employment, and price stability. However, macroeconomic theory is marked by diverse
prespectives concerning the appropriate policy actions required to acheive these goals. A number
of alternative schools of thought exist including Keynesianism, Monetarism, and Rational
Expectations. Each stresses different paths and perpectives on the proper path(s) to acheiving the
goals of macroeconomic success.
Your understanding of the material will be greatly enhanced by following the economic and
financial news over the period of this course. You should acquire the background necessary to be
able to formulate your own informed opinions on the workings of a macroeconomy. The specific
skills and competencies addressed in this course are explained in the two following sections:
"Learning objectives" and "Personal competencies."
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Preliminary Assignment:
Read this novel: The Price of Everything: A Parable of Possibility and Prosperity, 224 pages.
(Available at: http://www.amazon.com/dp/0691143358/ref=rdr_ext_sb_ti_sims_1)
Author: Russell Roberts
Publisher: Princeton University Press
Publication Date: August 24, 2009
ISBN-10: 0691143358
ISBN-13: 978-0691143354
Mid-term Assignment:
You will be required to write a 2-3 page paper which analyzes some news article pertaining to a
change in supply, change in demand, or the effects of some price control on markets. Your paper
must include a graphical analysis accompanied by a solid explanation of the issue, the
assumptions, the change that you are modeling, and the observed or expected effects of the
change. This project will be due at the beginning of Class Meeting 5. I am not looking for a
summary of what a reporter writes but rather a critical reading of and commentary on what they
write.
This assignment means that you must have some contact with the financial/economics news of the
world. Your sources might include: The Economist, The Wall Street Journal, Forbes, Business
Week, Investor's Business Daily, or the financial/business section of a major newspaper such as
the New York Times or the Washington Post or The Times of London. The paper should showcase
your ability to relate course materials to the economic news of the day. All papers must be typed
and double-spaced and accompanied by a short bibliography. If the analysis is from a specific
article, a copy of that article needs to be attached.
The course’s development of personal competences:
Personal and Interpersonal Competences
Self-motivation
Ability to understand complex systems and connections
Develop analytical prowess
Build confidence in knowledge of the economy
Build confidence in the handling new and varied tasks
Attention to details
Attention to the "big picture"
Ability to meet deadlines
Ability to access and interpret business and economic news
Ability to work effectively with peers
Build networking ability
Teaching methods:
The course is primarily lecture-based though short case studies are included in the textbook and
these will be covered in class. Periodically, I will also use in-class group work focused on a specific
short project such an analyzing a case or article. These sessions are designed to encourage
critical thinking and analytical skills. All such exercises will be debriefed with the entire class to
ensure that students are internalising the major points I am trying to address..
Required course readings and literature:
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The Price of Everything: A Parable of Possibility and Prosperity, 224 pages.
(Available at: http://www.amazon.com/dp/0691143358/ref=rdr_ext_sb_ti_sims_1)
Author: Russell Roberts
Publisher: Princeton University Press
Publication Date: August 24, 2009
ISBN-13: 978-0691143354
Modern Principles: Macroeconomics, Second Edition ©2012, 481 Pages
Authors: Tyler Cowen and Alex Tabarrok
Publisher: Worth Publishers
ISBN-13: 978-1-4292-3998-1
Course Outline
Class Meeting 1 - Introduction
Introductory Discussion of The Price of Everything: A Parable of Possibility and Prosperity,
1. The Big Ideas in Economics
2. The Power of Trade and Comparative Advantage
Class Meeting 2 - Supply and Demand, Price Controls
3. Supply and Demand
4. Equilibrium: How Supply and Demand Determine Prices
5. Price Ceilings and Price Floors
Class Meeting 3 - Economic Growth, National Income Accounting
6. GDP and The Measurement of Progress
7. The Wealth of Nations and Economic Growth
Appendix: The Magic of Compound Growth: Using a Spreadsheet
Class Meeting 4 - Economic Growth and Productivity
8. Growth, Capital Accumulation and the Economics of Ideas: Catching Up vs. The Cutting Edge
Appendix: Excellent Growth
9. Savings, Investment, and the Financial System
Appendix: Bond Pricing and Arbitrage
Class Meeting 5 - Personal Finance, Political Economy and Public Choice
10. Stock Markets and Personal Finance
21. Political Economy and Public Choice
Class Meeting 6 - Business Fluctuations, Employment, Money, and Inflation
11. Unemployment and Labor Force Participation
12. Inflation and the Quantity Theory of Money
Appendix: Get Real! An Excellent Adventure
Class Meeting 7 - Business Fluctuations, Aggregate Demand and Aggregate Supply, the
Transmission of Policy
13. Business Fluctuations: Aggregate Demand and Supply
14. Transmission and Amplification Mechanisms
Appendix: Business Fluctuations and the Solow Model
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Class Meeting 8 - Macroeconomic Policy and Institutions - Monetary Policy and the Fed
15. The Federal Reserve System and Open Market Operations
Appendix: The Money Multiplier Process in Detail
16. Monetary Policy
Class Meeting 9 - Macroeconomic Policy and Institutions - Fiscal Policy and Congress
17. The Federal Budget: Taxes and Spending
18. Fiscal Policy
Class Meeting 10 - International Economics - Trade, Finance, and Exchange Rates
19. International Trade
20. International Finance
Class Meeting 11 - Macroeconomics Course Review
Analysis of Current Economic Conditions and Policies in Europe or America
This exercise is designed to incorporate the materials that have been developed throughout the
course. Your inquiry should be within the framework of what you have learned in this course.
 What are the major problems in the selected economy?
 What are the current fiscal and monetary policies?
 Why are policy makers choosing these policies?
 Are the policies having their intended effects? If not, why not?
 What role is politics playing in the current choice of macroeconomic tools?
 What "storm clouds" sit on the horizon and what might policy makers we do about them?
Learning objectives:
Analytical Skills
 Articulate and discuss the concepts covered in the preliminary assignment The Price of
Everything: A Parable of Possibility and Prosperity
 Explain the broad conceptual nature of economics, its connections to human flourishing, its
broad and general goals, and the reasons for these goals
 Be able to explain comparative advantage
 Be able to explain gains from exchange
 Understand and discuss cost-benefit analysis within a basic supply and demand framework
 Analyze the effects of price controls on a market
 Articulate the microeconomic foundations of macroeconomics
 Understand the basic framework of National Income Accounting
 Interpret the importance of changes in major economic indicators including GDP and
unemployment data
 Explain basic economic growth models and the effects of economic growth and productivity
on standard-of-living
 Explain the business cycle and its effects on labor and capital
 Understand the major theoretical models explaining the macro economy (Keynesianism,
Monetarism, and Rational Expectations)
 Articulate the appropriate timing of expansionary and restrictive monetary and fiscal policies
with respect to the phase of the business cycle
 Analyze and explain the tools, purpose, and timing of monetary policies
 Analyze and explain the intended and unintended effects of monetary policies
 Analyze and explain the tools, purpose, and timing of fiscal policies
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Analyze and explain the intended and unintended effects of fiscal policies
Explain the various transmission effects associated with monetary and fiscal policy
Use the Aggregate Demand and Aggregate Supply Model to show the effects of monetary
and fiscal policies
Able to analyze and explain political support and opposition to fiscal and monetary policy
Address the major features of the international trading system
Address the effects of globalization on businesses
Explain exchange rates
Explain trade deficits
Exam format:
The assessment for the course will be a four-hour, closed-book, computer based examination. It
will be comprised of a combination of multiple choice, short answer, and essay questions. It will be
administered on a CBS computer and the Microsoft PC calculator will be all that is required.
Language dictionaries are allowed, as are writing utensils and a ruler or straight edge, if desired.
This examination is analytical in nature; it will require analysis using graphs. Paper will be
provided for graphical analysis.
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