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University of Vermont
Department of Economics
Course Outline
EC 11
Time: T/W/TH 1:00-4:45 P.M.
Room: Lafayette 411
Summer 2011
Professor Catalina Vizcarra
332 Old Mill
Phone Number: 6-0694
Office Hours: by appointment only
Principles of Macroeconomics
In this course we will study the fundamental principles of market economies and discuss a
wide range of conceptual tools that will help us analyze macroeconomic events such as
economic growth, inflation, and unemployment. By the end of the semester you should
have a good understanding of the basic functioning of the overall economy and of the role
that government has in influencing economic activity.
Michael Parkin. Macroeconomics. 10th Edition, Addison Wesley, 2011.
Mark Rush. Study Guide (textbook companion), Addison Wesley, 2011.
Course Evaluation
Your grade will be based on four in-class exams. The exams will be worth 25% of your
grade each.
Tentative Course Outline
Week One
Introduction. What is economics? Scarcity and trade-offs. Economics as a
Social Science. Microeconomics and Macroeconomics ( Chapter 1. Also,
review the appendix to Chapter 1: Graphs in Economics).
The Economic Problem. Opportunity Cost and the Production Possibilities
Frontier. The PPF and Marginal Cost. Preferences and Marginal Benefit.
Production Efficiency and Allocative Efficiency. The gains from trade and
economic growth (Chapter 2).
Demand and Supply fundamentals. The laws of supply and demand. Market
Equilibrium and market responses to shocks (Chapter 3).
Measuring Economic Growth. Gross Domestic Product. Nominal and Real
GDP. Limitations of Real GDP (Chapter 4).
Exam 1 (covers topics discussed in sections I and II of week one)
Week Two
Measuring Unemployment and the Price Level. The basic indicators of the
state of the labor market. Unemployment and Full Employment. Types of
Unemployment. The Consumer Price Index (CPI). Measuring Inflation
(Chapter 5).
Economic Growth. Long term trends in economic growth around the
world. Why are some countries rich and others poor? Theories of economic
growth. Economic Development. (Chapter 6).
Finance, Saving and Investment. Financial Institutions and Financial
Markets. The Market for Loanable Funds. The Origins of the 2007-2008
Financial Crisis. The Global Loanable Funds market (Chapter 7).
Exam 2 (covers topics discussed in section III of week one and sections I
and II of week 2)
Week Three
Money, the Price Level and Inflation. What’s money. How banks create
money. The Federal Reserve System. The Market for Money. The Quantity
Theory of Money (Chapter 8).
The Exchange Rate and the Balance of Payments (Chapter 9).
The Aggregate Supply/Aggregate Demand Model. Aggregate Demand,
Aggregate Supply, and Macroeconomic Equilibrium. Macroeconomic
Schools of Thought (Chapter 10).
Exam 3 (covers sections III of week 2 and I and II of week 3)
Week Four
Fiscal Policy. The Federal Budget. Fiscal policy and the business cycle
(discretionary vs. automatic stabilizers). The supply side effects of fiscal
policy. Generational effects of fiscal policies. Social Security (Chapter 13).
Monetary Policy. Monetary Policy Objectives and Framework. The
Conduct of Monetary Policy. Alternative Monetary Policy Strategies
(Chapter 14).
Review and Final Exam (covers sections III of week 3 and I and II of week
Note: It is the University policy to allow students to honor their religious holidays.
Students should submit in writing by the end of the second full week of classes their
documented religious holiday schedule for the semester so as to arrange for any necessary
make up work in advance.