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r INTERMEDIATE MACROECONOMIC THEORY ECONOMICS 3080 SECTION 1 SPRING 1990 1:00-1:50 MWF GUGG 205 THOMAS CARR OFFICE: Econ 4A OFFICE HRS: M 12-1 Tu 2:30 - 3:30 W 2- 3 SUBJECT Macroeconomics is the study of the economy in the aggregate. The analysis centers on the factors determining the level of national output, e mplo yment, inflation, and interest rates. There is considerable disagreement between various schools of macroeconomic thought about how the economy works. The differences in theory lead to very different economic policy prescriptions. This course will -develop analytical models of the economy, compare the leading macroeconomic theories, and examine important historical economic events and policies that have influenced the economy in the past . .,. READINGS 1) Froyen, Richard T., Macroeconomics 3nd e d., Macmillian Publishing Co. 1986. 2) Recommended newspapers and magazines: Wall Street Journal, New York Times, The Economist, Business Week, Barron's. EXAMS AND GRADING The course grade is Midterm 1 Midterm 2 Final Exam weighted by the following factors: 30% 30% 40% (comprehensive) 100% In borderline cases, factors such as class participation, motivation, and upward progress are considered. Tenative exam dates are listed in the course outline. Bring bluebooks for exams. 1 OUTLINE READING Introduction A. Background of Major Theories B. Macroeconomic Indicators Chap. 1 Chap. 2 I. Classical Economics A. Price Theory and Say's Law B. Output and Employment C. Loanable Funds D. Quantity Theory of Money E. The Great Depression II. Keynesian Economics A. Keynes: General Theory 1. Income Determination Model a. Consumption b. Investment c . Equilibrium Income 2. Keynes' Monetary Theory a. Money Demand: Liquidity b. Interest Rate Theory Chap. 3 Chap. 4 Chap . 5 Chap. 6 (p.131-145) *** MIDTERM I*** Monday, Feb. 19 B. Nee-Keynesian: The Neoclassical-Keynesian Synthesis 1. IS-LM Model Chap. 6 a. LM: Money Market (p.146-182) b. IS: Product Market c. Interest Rate-Income Equilibrium d. Polici e s and Case Studies Chap. 7 2. Aggregate Supply and Demand Model Chap. 8 a. Aggregate Demand and IS-LM b. Aggregate Supply ·and Labor c. Price Level-Output Equilibrium d. Policies and Supply Shocks III. Monetarism A. Modern Quantity Theory 1 . Friedman's Money Demand 2 . Money and Income B. Output and Inflation 1. Natural Rate of Unemployment 2. Long Run Phillips Curve C. Policies and Case Studies IV. New Classical Economics A , Rational Expectations Hypothesis B. Policy Ineffectiveness Postulate Summary: Macroeconomic Theories *** MIDTERM II*** Wednesday, March 21 2 Chap. 9 Chap. 10 Chap. ·.1 1 Chap. 12 r V. Growth and Supply-side Economics -- VI. International Sector A. Exchange Rates B. Trade C. Open Economy IS-LM Chap. 16 Chap. 19 *** FINAL EXAM*** Friday May 11, 1990 7:30 pm to 10:30 pm ~· 3