Download Yarmouk University Economics 200

Yarmouk University
Faculty of Economics and Administrative Sciences
Department of Economics
Econ. 201: Macroeconomics Theory
Course Credit: 3 Cr. Hrs.
Class Sections Time and Locations:
Instructor: Dr. Hasan El-Nader
Office Hours: Mon, and Wed 2:00-3:30
Office Location: Rm. 210A
Pre-requisite: Econ. 101 and Econ. 105
E-mail address: [email protected]
http://oldfaculty.yu.edu.jo/el-nader
Tel: 00962 2 7211111 ext. 6710
Course Description:
This course will equip the student with the principles he needs to understand the
conflicting and contradictory discussions of economic conditions and policies in the
economy. The course stems from the belief that all macroeconomic questions relate to
a core set of basic macro puzzles, and that those puzzles have solutions. The students
is guided to the most direct solution of each puzzle and implements that approach by
introducing a few basic models. These models are then applied immediately in case
study sections.
Course Objectives:
This course has been guided by five organizing principles:
1. Macro questions have answers by using the traditional Macro models.
2. Up-front treatment of business cycles and inflation.
3. Integration of models and have the distinction between short-run macro devoted
to explaining business cycles and their preventions, and long-run macro
dedicated to explaining economic growth and the long-run consequences of dept
and deficits.
4. Simple graphs can convey important research results.
5. The economy is open from the start to reflect the real word.
Learning Outcomes:
After completing this course the student must acquire the knowledge and ability to:
 Distinguish between the major concepts of macro economics, like nominal,
real, and natural GDP, and the natural rate of unemployment. The
difference between GDP and GNP.
 How to measure nominal and real GDP and how to calculate the annual
growth rate of anything over any period of time.
 Understand the Keynesian expenditure model and the IS-LM model.
 Understand the fiscal dept and deficits, national saving, and the link
between international deficits, national saving, and exchange rate.
 Understand inflation and the determinants of it.
 To derive the aggregate demand curve from the IS-LM model and
motivates the short-run and long-run aggregate supply curves.
 To use the above knowledge to analyze some aspects in real world.
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Teaching Methods:
The course will be based on the following teaching and learning activities:
 Lectures covering the theoretical part using projector presentations.
 Case studies.
 Review questions.
Teaching Resources:
Textbook: Robert J. Gordon, Macroeconomics, 11th Edition, Pearson –Addison
Course outline:
Subject
Chapter
Introduction: What is Macroeconomics?
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The Measurement of Income: income and expenditure
2
Measurement of Prices and unemployment.
equation and the twin deficits.
Income flows from business firms to households?
Nominal GDP, Real GDP, and the GDP deflator.
Measuring unemployment.
Spending, Income, and Interest Rates.
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Business cycles and the theory of income determination.
Income determination, unemployment, and the price level.
Planned expenditure.
The economy in and out of equilibrium.
The multiplier effect
Sources of shifts in planned spending.
How can monetary policy affect planned spending?
The relation of autonomous planned spending to the interest rate.
The IS cu
Monetary and Fiscal Policy in the IS-LM Model.
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The power of monetary and fiscal policy.
Why people use money?
How the Central Bank controls the money supply.
Income, interest rate, and the demand for money.
The LM curve.
The IS curve meets the LM curve.
Monetary policy in action.
How fiscal expansion can “crowd out” investment.
Strong and week effects of monetary policy.
Strong and week effects of fiscal policy.
Using fiscal and monetary policy together.
Introduction to National Saving.
5
The government budget: The cyclical and structural budget.
Discussion for some questions in the text.
National saving and the consequences of the government
budget.
Case study: How the deficit rejoined to become “Twins”
2
Introduction to International Trade
6.
The current account and the balance of payments.
Exchange rates.
The market for the foreign exchange.
Real exchange rate and the purchasing power parity.
Exchange rate systems.
The IS-LM Model in a small open economy.
Capital mobility and exchange rates in a large open economy.
Aggregate Demand (AD) and Aggregate Supply (AS).
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Combining AD with AS.
Flexible prices and the AD curve.
Shifting the Aggregate demand curve with monetary and
fiscal policy.
Alternative shapes of the short-run AS curve.
The short-run AS curve when nominal wage rate is constant.
Discussion of Exam 2 results.
How the wage rate is set.
Fiscal and monetary expansion in the short-run and long run.
Classical Macroeconomics: The quantity theory of money and
the self correcting economy.
The Keynesian Revolution: The failure of self correction.
Inflation: Its Causes and Cures.
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The short-run Phillips curve.
Discussion Questions.
The adjustment of expectations.
Nominal GDP growth and inflation.
Effects of acceleration in nominal GDP growth.
Expectations and the inflation cycle.
Recession as a cure of inflation.
The importance of supply shocks.
The response of inflation and the output ratio to a supply
shocks.
Inflation and output fluctuations.
How is the unemployment rate related to the inflation rate?
Money and the Financial Markets
13
Instability in the Private Economy
Consumption Behavior
15
Investment Behavior
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Final Grades
The final grade will be based on two in-term exams, homework’s, and the final
First exam
25%
Second exam
25%
Final exam
50%
Midterms and Final exams are Closed book and notes.
The Final exam is comprehensive covering all the materials we cover in the class.
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Attendance Policy:
Students are expected to attend all classes for the full length of the class period.
According to the university policy, a student will fail the course if he misses more
than 15% of the classes
Exams Policy:
Homework's might be given as a preparation for exams. Homework will not be
collected and only intended as exercises
The final exam is comprehensive covering all the materials we cover in class.
General Policy:
There will be no tolerance for inappropriate behavior.
Turn off all of your phones or any other communication devices while in class. If
you use your mobile phone in the class in any way, you will be asked to leave the
class.
No talking in the class is allowed unless you are asked to do so.
Do not come to class late. It is a big disturbance to the class to enter the classroom
when the class is in session.
If you leave the class in the middle of the lecture, you will not be
allowed to re-enter the classroom.
Good Luck
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