Download ECON 2020-200 Principles of Macroeconomics

P rincipIes
o f
E c o n o m i c s:
MACRO
EC0-2020 Section 200
DuanG030
Call # 42209
ll :00-12:15TR
Spring 1990
Instructor: Ralph T. Byrns, Ph.D.
Adjunct Professor of Economics
University of Colorado - Boulder
Office: Econ 202
Phone: 492-7740
Hours: 09:45-11:00 TR or by appointment
Emergencies: Home: 779-0907 Off ice: 794-8520
#
Hour /weekday
Room
T/A
Office
211
09:00-09:50 M
Hlms 341
A. Algaz
Econ 401
X 26875
443-9988
212
09:00-09:50 W
Econ 205
A. Algaz
213
02:00-02:50 R
Econ 119
M. Lewis
Econ 306
X 26875
469-8083
214
I 0:00-10:50 W
Econ 2
A. Algaz
215
11:00-11:50 M
Econ 119
C. Knudsen
Econ 401
X 26875
447-9260
216
10:00-10:50 T
Muen 0346
A. Konan
217
08:00-08:50 R
Hims 241
A. Konan
Econ 313
X 26653
786-0433
2 18
04:00-04:50 T
Gugg 3
A. Konan
219
02:00-02:50 F
Econ 205
A. Konan
220
05:00-05:50 M
Econ 2
A. Algaz
221
09:00-09:50 M
Econ 13
C. Knudsen
222
08:00-08:50 R
Hims 263
C. Knudsen
Hours
Phone(s)
Principles
of
Macroeconom1cs
This course introduces such important economic concepts as: the market system and its
alternatives, s upply and demand, the measurement and determination of a nation's output
and income, the determinants of unemployment and inflation, both demand-side and
supply-side aspects of fiscal and monetary policies, the federal debt, and international
trade and finance. A key feature of the course is the application of economic analysis
to such real world problems as persistent federal deficits and massive international debt.
TEXTBOOKS AND MATERIALS
Materials required for this course include:
...
l) Ralph T. Byrns and Gerald W. Stone, Economics, 4/e OR Macroeconomics, 4/c .
both with Economics Software (Glenview, II: Scott, Foresman & Co.) 1989,
2) Ralph T. Byrns and Gerald W. Stone, Student Guide for Learning Economics
(OR Macroeconomics), 4/c, (Glenview, II: Scott, Foresman & Co.), 1989.
3) Economics through TIME (A Class Hand-out)
Strongly recommended:
A subscription to The Wall Street Journal.
Study Suggestions: "TO THE STUDENT" in the Preface of the text provides helpful study
hints that you should consider before you begin working on other materials.
GRADES
Grades are based on performance on 12 weekly quizzes (given in-class on Thursdays
unless a major exam is scheduled), two major exams, a comprehensive final, and
performance in your recitation. Students caught cheating receive automatic Fs, and
other measures may be taken. The top score on each major exam and the final will
receive maximum potential points; other grades will then be adjusted accordingly.
Grade Scale
A= 900
B = 800
C = 700
D = 600
Potential Points
12 weekly quizzes (25 ea.)
2 major exams (150 ea.)
Recitations
Comprehensive final exam
300
300
100
300
TOTAL
1000
F = 599 or less
Examinations: Lectures may not repeat reading assignments. All lectures and assignments
arc fair game for scheduled quizzes and exams. Quizzes = 12 multiple choice questions,
major exams = 50 questions, and the comprehensive final = 100 questions.
Exemption from the First Two Exams: Students cumulatively scoring in the top 5% on
the four quizzes given during each of the first two five-week modules are exempt from
that major exam, with an automatic grade of 150 points. All students must take the
comprehensive final exam to receive credit in this course.
ATTENDANCE AND MAKE-UPS
Attendance is strongly suggested. Most students perform satisfactorily if they attend
class regularly, read the text thoroughly, and work through the Study Guide. Some
topics covered in class are not i n the text or reading material. You are responsible for
all ma terials covered in missed classes, and should acquire copies of notes from students
who were present. Failure to keep up in this course can be fatal to your grade. Missed
exams or quizzes will be made-up through added weight on the comprehensive final exam.
**** NO OTHER MAKE-UP EXAMS WILL BE GIVEN ****
OPTIONAL ASSIGNMENT S
Six optional Macrosim assignments may each add as much as 15 points to your point
total. Assignments not in accord with all directions will receive ZERO credit. Students
receiving maximum points on all six will ge awarded a 10 point bonus. Thus, unless your
cumulative score from examinations is below 500 or above 900, maximum optional points
will definitely raise your final course grade.
FORMAT AND DUE DATES
Your objective in each Macrosim scenario is to. optimize the function specified for it.
Usually, this entails maximizing real economic growth while minimizing unemployment and
inflation. Some scenarios also require controlling such things as run-away budget deficits.
Optional
Title
Objective
#l
#2
Stable
Recession
Inflation
Depression
Deficit
Stagflation
MAX
MAX
MAX
MAX
MAX
MAX
#3
#4
#5
#6
where
y
p
u
d
=
=
=
=
[(Y8 - YO)*IOO]/YO
[(PO - P8)* 100]/PO
[(UO - U8)* 100]/UO
[(DO - 08)* 100]/DO
(y
(y
(y
(y
(y
(y
+
+
+
+
+
+
p
p
p
p
p
p
+
+
+
+
+
+
Y
P
U
D
=real-GNP
= inflation rate
= unemployment rate
= federal deficit
u)
u)
u)
u)
u + d)
u)
In essence, these formulae reward economic growth and reductions in the deficit, or in
the rates of unemployment or inflation. You will need to calculate real Y, but p, u, and
d are calculated for you and reported by Macrosim at the end of the eighth period.
You must hand in your results as printed by the program after the eighth round of a
scenario, with a cover sheet on which you will TYPE your (a) your name and student
number, (b) the week day and hour your recitation section meets, (c) the name of your
teaching assistant, and (d) the name of the scenario and a correctly calculated score for
it according to the appropriate formula. Assignments must be turned in during your
recitation section in the week specified below (weeks 10-15). Late assignments will not
be a ccepted. Incorrect calculations of your score also eliminates credit.
OUTL I NE
WEEK
DATES
Jan 17 - Jan 19
ASSIGNMENT:
2
Jan 22 - Jan 26
ASSIGNMENT:
AND
TOP ICS
ORIENT A TION
1. Course Requirements
INTRODUCTION TO ECONOMICS
1. Macro vs. Micro
2. Positive vs. Normative
3. Theories/ Methods of Economics
Text and SG:
Software:
Text and SG:
Software:
Jan 29 - Feb 2
ASSIGNMENT:
Chapter 1
Graph-Tutor
PRODUCTION POSSIBILITIES CUR VE
1. The Economic Problem
2. Production Possibilities Frontiers
ALTERNATIVE ECONOMIC SYSTEMS
1. Criticisms of Capitalism
a. Socialism b. Marxism
2. Comparative Systems
a. USSR, China, Fr ance, Sweden
b. Yugoslavia, Britain
INTRODUCTION TO DEMAND & SUPPLY ANALYSIS
I. The Demand Curve
a. Determi nants of Demand
b. Shirting the Curve
c. Market Demand Curves
TIME:
3
S CHE DULE
Chapters 2, 22 (38 in Economics),
and beginning of 3
7-f-29, 9-21-36, 10-14-57, 1-1-58, 12-1-58,
8-4-67, 7-5-68, 8-6- 73, 4-4-83
Study-Cale - pp. 11-20 and PPF
DEMAND & SUPPLY ANALYSIS (cont.)
1. The Supply Curve
a. Determinants and Supply Shifters
b. Market Supply Curves
PRICES AND MARKETS
1. Market Equilibrium
a. Equilibrium Price and Quantity
b. Shifts of Demand and Supply
c. Shortages and Surpluses
2. Government Policies and Markets
a. Price Controls
b. Tax Wedges and Regulations
Text and SG:
Time:
Software:
Chapters 3 and 4
12-21-42, 6-28-43, 1-29-51, 11 - 19-51,
10-18-71, 1-14-74
Mail Room - Work for BEE
Study-Cale - Exercise 2 and Market
4
Feb 5 - Feb 9
HOUSEHOLDS AND THE ECONOMY
l. Circular Flows
2. Income Distribution
3. Labor Institutions
BUSINESS AND FINANCIAL INSTITUTIONS
I. Legal Forms of Business
2. Corporate Goals
THE PUBLIC SECTOR
I. The Need for Government
2. Paying for Government
Chapter 5
5-11-31, 5-11-42, 4-4-46, 12-25-50,
4-16-65, 5-6-65, 5-21-65, 5-13-66,
8-6-73, 8-13-79, 1-17-83, 4-22-85, 1-18-82
Software
Mai/Room
(Hand in print-out when CEA starts)
Text and SG:
TIME:
ASSIGNMENT:
------------------------------------------------------------5
UNEMPLOYMENT AND INFLATION
I. Aggregate Demands and Supplies
2. Measuring Unemployment
3. Types of Unemployment
4. Costs of Unemployment
5. Measuring Inflation
6. Costs of Inflation
Feb 12 - Feb 16
Text and SG:
Software:
ASSIGNMENT:
Chapter 6
Macrosim - Exercise I
Mai/Room - Begin work for CEA
---- ----------------------------------------------------------6 Feb 19 - Feb 23
MEASURING GROSS NATIONAL PRODUCT
I. GNP Defined
2. Three Approaches to GNP
3. Limitations of GNP Accounting
4. GNP as a Measure of Social Welfare
Text and SG:
Software:
ASSIGNMENT:
Chapter 7
Mai/Room - Print-out for CEA
=--=====-==-----=====================================--======-======
***
Feb 22
FIRST MAJOR EXAM
***
====================================================================
7 Feb 26 - Mar 2
ASSIGNMENT:
EARLY BUSINESS CYCLE THEORIES
I. The Nature of Business Cycles
2. Early Business Cycle Theories
3. Classical Theory
4. Social Aspects of the Business Cycle
5. American Business Cycle Record
6. The Keynesian Revolution
Text and SG:
TIME:
Chapter 8
The 1920s and 1930s
8 Ma r 5 - Mar 9
SOURCES OF AGGREGATE DEMAND
1. Consumption (C) and Saving (S)
2. Investment (I)
3. Government Purchases (G)
4. The Foreign Sector (X-M)
5. Keynesian Aggregate Demand (C+I+G+X-M)
6. The Economy's Aggregate Demand Curve
Text and SG:
TIME:
ASSIGNMENT:
EQUILIBRIUM OUTPUT, EMPLOYMENT AND INCOME
1. Aggregate Expenditures = Aggregate Output
2. Savings = Investment Approach
3. Equilibrium Income and the Multiplier
4. Potential vs. Equilibrium Income
5. The Economy's Aggregate Supply and Demand Curves
9 Mar12-Mar16
Text and SG:
Software: ·
ASSIGNMENT:
10 Mar 19 - Mar 23
Chapter 9
The 1940s
Chapter JO
StudyCalc - Exercise 3, Problem I and
Keynes
GOVERNMENT SPENDING AND TAXATION
I. Discretionary Fiscal Policy
2. Automatic Stabilizers
3. Fiscal Policy in Practice
4. Supply-side Fiscal Policy
ASSIGNMENT:
Text and SG:
TIME:
Software:
Chapter 11
All remaining material
Macrosim - Exercise 2 (5 points)
StudyCalc - Exercise 3, Prob. 2 and La/fer
OPTIONAL #l DUE
===================================================================
Mar 26 - Mar 30
***** SPRING BREAK *****
=------------------=================================================
11
Apr 2 - Apr 6
ASSIGNMENT:
MONEY
I. Functions of Money
2. The Supply of Money
3. Banks and the Creation of Money
Text and SG:
Chapter 12
Software:
Macrosim - Exercise 3
OPTIONAL #2 DUE
-------------------=================================================
April 5
******SECOND MAJOR EXAM******
=====----===========================================================
12
Apr 9 - Apr 13
THE FEDERAL RESERVE SYSTEM
I. The Federal Reserve System
2. The FED's Tools and Objectives
MONETARY THEORY AND POLICY
1. Demand for Money
2. Keynesian Monetary Theory
3. Classical and Modern Monetarism
4. Rules vs. Discretionary Policies
ASSIGNMENT:
13
Apr 16 - Apr 20
Text and SG: Chapters 13 and 14
Software:
StudyCa/c - Exercise 4 and Money
OPTIONAL #3 DUE
DEFICITS AND DEBT
1. Financing Government and Crowding-out
2. T he Public Debt
AGGREGATE DEMANDS AND SUPPLIES
1. Foundations
2. Inflation/Recession: 1960 - present
ASSIGNMENT
Text and SG:
TIME:
Software:
Chapters 15 and 16
The 1960s, 1970s, and 1980s
Macrosim - Exercise 4
StudyCalc - Exercise 5 and AGD-AGS
OPTIONAL #4 DUE
14
Apr 23 - Apr 26
MODERN MACRO THEORY AND ST AG FLA TION
1. The Phillips Curve
2. Natural Rate Theories
LIMIT A TIO NS OF STABILIZATION POLICY
1. Lags and Insulation
2. Political Cycles and New Classical Macroeconomics
ASSIGNMENT:
Text and SG:
Software:
Chapters 17 and 18
Macrosim - Exercise 5
StudyCa/c - Exercise 6 and Phillips
OPTIONAL #5 DUE
15
Apr29-May3
INTERNATIONAL TRADE AND FINANCE
1. The Gains from Trade
2. Commercial Policies and Trade Barriers
3. Balances of Payments
4. Exchange Rate Determination
ASSIGNMENT:
16 May6-7
Text and SG:
Chapters 20 and 21 (36 and 37 in ECO)
Software:
StudyCalc - Exercise 11 and Trade
OPTIONAL #6 DUE
Catch-up and Review
-------------================================================
I7
May IO - May 16
REVIEW and COMPREHENSIVE FINAL