ECON 202 Principles of Contemporary Macroeconomics

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ECON 202



Principles of Contemporary Macroeconomics


Prerequisite:
None

Administrative Information:

Class Duration:

April 5

to
June 21
, 2011

Day/Time:

Tuesday

/
9:00 a.m.
-

12:45 p.m.

Location:

Annandale

Campus,
G110


7535 Little
River Turnpike


Annandale
, VA
22003

Annandale

Campus Phone:

(703) 941
-
0949


Instructor Contact Information:

Instructor:

Alireza

Khorsand
,
Ph.D.



Office Hours:

By appointment



Office Hour Location:

Annandale campus



E
-
mail:

akhorsand.faculty@unva.edu



Telephone:

(703) 919
-
7383



Instructional Material:

Boyes ,W. J., & Melvin, M.

(
2008
).
Macroeconomics

(
7th

ed.).
Cengage Houghton Mifflin
.

ISBN 9780618761272.



Course Description:

Introduction to macroeconomics in the context of current problems. National income analysis,
money and banking, economic growth and stability, unemployment, inflation, and the role of
government.

(3 credit hours)



2


Course Learning Outcome:

Upon successful completion of the course, the student will be able to:



Identify the nature of a market economy



Understand the basics of supply and demand.



Learn the concept of economic efficiency



Know the measurement and meaning
of Gross Domestic Product (GDP)



Know the measurement and meaning of unemployment



Know the measurement and meaning of inflation



Understand the basic concepts of aggregate supply and aggregate demand



Understand the basic concepts of monetary policy



Understan
d the basic concepts of fiscal policy



Identify the limitations of government involvement in markets and individual choices


Teaching Method:

Emphasis will be placed on a variety of methods such as lecture, PowerPoint, student assignments
(research and
presentation), class discussion and analysis of current events.

The textbook will be used as a reference to address the course material.
Handouts and other
materials may be given to students during the course of the semester.



3


Course Schedule and Outline:


Week

Date

Lecture Topic

Assignment
Given

Assignment
Due

Textbook
Reading

1

Apr.
5

Class Introduction

Textbook Introduction

Economics: The World Around
You

Working with graphs



Chapter 1

Chapter 1
-
Appx

2

Apr. 1
2

Choice, Opportunity Cost, and
Specialization

Markets, Demand & Supply, and
the Price System

Assignment # 1


Chapters 2 & 3

3

Apr. 19

The Market System and the
Private Sector

The Public Sector

Assignment # 2

Assignment # 1

Chapter
s

4

& 5

4

Apr. 2
6


National Income Accounting

An
Introduction to the Foreign
Exchange Market

Assignments # 3

Assignment # 2

Chapters
6

&
7

5

May.
3

Unemployment and Inflation

Macroeconomic Equilibrium:
Aggregate Demand and Supply

Assignment # 4

Assignments # 3

Chapter
s 8 & 9

6

May. 1
0

Mid
-
term Exam

Assignment #
5

Assignments # 4


7

May.
17

Aggregate Expenditures

Income and Expenditures
Equilibrium


Assignment #
6


Assignments #

5

Mid
-
term Review

Term Project
Report

Chapters
10

&
11

8

May. 2
4

Fiscal Policy

Money and Banking

Assignment #
7

Assignment #

6

Chapters 1
2

& 1
3

9

May.

31

Monetary Policy

Macroeconomic Policy

Assignment #
8

Assignment # 7

Chapter
s 14 & 15

10

Jun.
7

Macroeconomic Viewpoints

Economic Growth


Assignments # 8

Chapters 1
6

& 1
7

11

Jun. 1
4

Term project Presentation


Term project
Submission


12

Jun. 2
1

Final test




4


Course Requirement and Evaluation:

Exams:
exams

will consist of multiple choices and essay questions designed to test students of
their mastering of theories, principles and concepts, their ability to reason quantitatively, and their
skill in applying theories and concepts to real
-
world problems.

We w
ill have two non
-
cumulative exams during the Quadmester; one mid
-
term and one final
examination.

Students who miss either or both exams will get an automatic F grade for those exams

Assignments
: during the Quadmester student will be given individual assig
nments to complete.
The individual assignments are based on case study mostly from each chapter that has been
covered in the class. We will have 8 individual assignments which will count for a total of 25
percent of the final grade. Those assignments are
given to the students at the end of each class
and are
due

as indicated in the course schedule and outline section. Late assignments will
automatically lose 2/3 of the assignment grade.


Individual assignments should be submitted through Moodle on or befo
re the due date. Moodle
submission is required for full
-
credit.


Term Project
: The term project is required to be accomplished by a group (team) of students (the
number of team will be determined in the class by common accord). The term project will count
for 20 percent of the final grade.


The term project paper should be submitted through Moodle on or before the due date. Moodle
submission is required for full
-
credit. In addition, term projects must be presented by the
student(s) to the class for a maxim
um duration of 10 minutes.


Term Project topic: students have freedom to choose any topic of their interest with condition that
it must relate to the course subject.


Term Project format and page length: the paper should be formatted using Arial or Times
New
roman: 12 pt. font. The paper length should be a
minimum of 8 and maximum of 16 pages
double spaced in Word.


For information on reference and citation styles see:
http://writing.wisc.edu/Handbook/Documentation.html


Term project should have the following sections:



Title page or cover

sheet



Table of contents



Introduction or executive summary



Discussion of the main subject



Conclusion



References


Late term project will not be accepted and lose the points for the term project


Note on Term Project:

the following are the breakdown values of the term project:



Oral presentation = 70% of the grade



Paper submitted = 30%


5


Class participation & Attendance
: to successfully complete this course and to receive credit,
students must attend classes and partici
pate in class discussion and complete all assignments and
examinations.


Grading Policy:

All exams, assignments, and class participation have a point value. Final grades
will be determined by a percentage of the total possible points as follows:


The deliv
erables will entail 100 possible points, broken down as follows:


250 points

Individual assignments (8)


200 points

Term project


50 points

Class participation & Attendance


250 points

Midterm Exam


250 points

Final Exam

1000 points






The numerical score
is then converted to a letter grade using the following scale:

Above and including 900
-

A

Above and including 800
-

B

Above and including 700
-

C

Above and including 600
-

D

Below and not including 600
-

F

Supporting Material:

Perrin,
Robert. (2007).
Pocket Guide to APA Style

Second Edition. New York: Houghton Mifflin
Company. This book assists students with the research paper requirements. It is recommended
but not required.


Academic Integrity:

Academic honesty is non
-
negotiable. All

assignments submitted in fulfillment of course
requirements must be the student's own work. Plagiarism and/or any other form of academic
dishonesty will not be tolerated and will result in a grade of zero on the assignment. Students
should consult the Stu
dent’s Handbook (page 9) on the university web
-
site or in the university
catalog (page 28
-
29) at following links:



http://www.unva.edu/2011_
--
_2013_complete_catalog.pdf



http://www.unva.edu/forms/StudentHandbook.pdf for 2010
-
2011 Student Handbook

6


Attendan
ce, Absence, Attending Each Class Meeting On
-
time:



International students in the US on F
-
1 visas, and Students receiving Veteran’s benefits are
reminded that regular attendance is required. The university is required by law to report
excessive absenteeism

by students in these two categories.



In accordance with the policies of the University of Northern Virginia, class attendance is
required. If a student has more than three absences in consecutive weeks, he or she will be asked
to meet with the Internatio
nal Student Advisor.



It is the student's responsibility to inform the instructor prior to an absence from class. Messages
can be left at the instructor’s e
-
mail or phone. Students are responsible for work missed during an
absence.



Each class will start p
romptly at the scheduled time.

Incomplete Grade Policy:

A course grade of “incomplete” will be given only under very unusual circumstances. Instructors
have the option of issuing an incomplete grade to students whose work in the course has been
satisfact
ory and only if the student has completed at least 75% of the assigned work by the last
day of class and only when an incomplete contract is signed and approved by instructor.
Incomplete grades must be changed no later than the end of the following term.

For example: If a
student is issued an incomplete grade in Summer 2010 , the student must complete the required
work no later than the end of Fall 2010 and a grade change must be submitted by the instructor,
otherwise Incomplete grade will automatically c
hanged to an “F”.

Learning Resources / Library:

Utilization of library resources is an indispensible part of your education at the UNVA.


Our
librarians are available to assist you from 9:00 a.m. to 10 p.m. seven days a week.


You can also
reach them at (
703) 392
-
0487. Please take advantage of this opportunity for assistance to your
success while you are here at UNVA.


The UNVA library offers an extensive range of resources, particularly online, for student use.


Our library subscription journal databases

include:



ABI/INFORM Complete

o

ABI Dateline

o

ABI Global

o

ABI T&I



Academic OneFile



Business & Company Resource Center



Business ASAP



Business Source Complete



Computer Database



Dissertations & Theses



EconLit with Full Text



Education Research Complete



ERIC



Expanded Academic ASAP



General Business File ASAP



General OneFile



Health and Wellness Resource Center



Health Reference Center Academic

7




IBISWorld



InfoTrac Custom Newspapers



LegalTrac



Library,
Information Science & Technology Abstracts



Literature Resource Center



Newsletters ASAP



ProQuest Psychology Journals



ProQuest Research Library



Student Resource Center Gold Edition



Teacher Reference Center



...and other article databases



The library also provides access to thousands of electronic books, including:



ebrary



EBL Books



Safari Business & Tech Books



...and other e
-
book collections




































8


Chapters Learning Outcomes:


After reading and
reviewing the following chapters, the student should be able to:


Chapter 1



Discuss reasons for studying economics.



Define economics.



Understand the concept of scarcity as it relates to economic goods, economic bads, and free
goods.



Name the three resources, or factors of production.



Understand the concept of rational self
-
interest.



Explain the economic way of thinking, including the difference between positive and normative
analysis.



Understand the difference between macroeconomics and microeconomics.


Chapter 2



Define opportunity costs.



Construct and understand a productions possibilities curve (PPC).



Discuss points inside and outside the PPC.



Calculate marginal opportunity costs.



Understand the concept of comp
arative advantage as it relates to specialization.


Chapter 3



Describe a market system.



Explain how money facilitates the exchange process.



Distinguish between demand and quantity demanded and sup
ply and quantity supplied.



Explain the laws of demand and supply.



Construct demand and supply curves from demand and supply schedules.



Distinguish between a change in demand and a change in quanti
ty demanded.



Distinguish between a change in supply and a change in quantity supplied.



List factors that cause shifts in demand and supply curves.



Determine equilibrium price and quantity.



Explain surpluses and shortages.



Determine impacts on equilibrium price and quantity resulting from shifts in demand and supply.



Explain the impact of price floors and price ceilings.


Chapter
4



Explain the concept of consumer sovereignty as it applies to the market system.



Name and describe the three sectors of the economy that comprise the private sector.



Name and describe the sector
of the economy that comprises the public sector.



Use the proper terminology for household spending, business spending, and international
spending.



Describe recent patterns of consumption, investment, and net exports.



Explain the interaction among the three private sectors through the use of a circular flow diagram.





9



Chapter 5



Insert the government sector into the circular flow diagram.



Define the economic

role of the government.



Explain the government’s role in dealing with market imperfections.



Discuss the differences between public goods and private property rights.



Explain the basics of public
choice theory.



Define monetary and fiscal policies and explain the government’s organization used to implement
these policies.



Compare the U.S. government to the governments of other economies.


Chapter 6



Define national income accounting.



Calculate various measures of a nation’s output, including GDP, GNP, NNP, NI, PI, and DPI.



Calculate GDP as output, as expenditures, and as income.



Understand the difference between nominal and real GDP.



Calculate a price index.



Name several types of price indexes.



Chapter 7



Define foreign exchange and the foreign exchange market.



Use current exchange rates to determine prices of one country’s money in terms of another
country’s money.



Distinguish between appreciation and depreciation of a currency.



Define balance of payments
.



Explain debits and credits in a balance of payments.



Explain the components of the current and financial accounts.


Chapter 8



Describe the business cycle.



Define recession an
d depression.



Provide examples of leading, coincident, and lagging indicators.



Define and calculate the unemployment rate.



Explain limitations of the unemployment rate calculation.



List and explain the four basic types of unemployment.



Define inflation and discuss the two types of inflation.



Explain the difference between nominal and real interest rates.


Chapter 9



Define aggregate demand and aggregate supply.



Show how business cycles result from changes in aggregate demand and aggregate supply.



List factors that affect consumption, investment, government sp
ending, and net exports.



Explain the wealth effect, the interest rate effect, and the international trade effect as reasons for a
downward
-
sloping aggregate demand curve.



List nonprice determinants that cause the agg
regate demand curve to shift.



Explain differences in the short
-
run and long
-
run aggregate supply curves.



List nonprice determinants that cause the aggregate supply curve to shift.

10




Show how aggrega
te demand and aggregate supply equilibrium is determined.


Chapter 10



Define disposable income as the sum of consumption and saving.



Graphically construct consumption and saving functions.



Define
autonomous consumption.



Calculate marginal propensity to consume, marginal propensity to save, average propensity to
consume, and average propensity to save.



Review the determinants of consumption.



Graphically construct investment as a function of income.



List the determinants of investment.



Graphically construct government spending as a function of income.



Graphically construct net export
s as a function of income.


Chapter 11



Define equilibrium.



Explain the impact of changes in aggregate expenditures on real GDP.



Define leakages and injections of planned spending.



Define and calculate the spending multiplier.



Use the spending multiplier to calculate the recessionary gap.



Name factors other than MPS and MPI that determine the actual spending multiplier in an

economy.



Derive an aggregate demand curve.



Explain the Keynesian model.


Chapter 12



Define fiscal policy.



Explain how a government can use fiscal policy to close the GDP gap.



Explain the financing of government spending.



Explain Ricardian equivalence.



Explain the budget process in the United States.



Define discretionary fiscal policy.



Explain the effects of budget deficits.



List automatic stabilizers.



Compare fiscal policy in other countries with that of the United States.


Chapter 13



Define money.



List the functions of money.



Define the U.S. money supply in terms of M1 and M2.



Explain international reserve currencies and composite currencies.



1
Describe the current U.S. banking s
tructure.



Explain how international banking differs from U.S. banking.



Define the fractional reserve banking system.



Calculate required reserves and excess reserves.



Calculate
the deposit expansion multiplier and use it to determine the maximum increase in the
money supply.


11



Chapter 14



Discuss the structure of the Federal Reserve System.



List the functions of the Federal Reserve.



Explain how the Federal Reserve implements monetary policy.



Explain the quantity theory of money.



Explain the tools of monetary policy

the reserve requirement, the discount rate, and open
market operation
s.



Explain the determinants of the demand for money.


Chapter 15



Explain the Phillips curve.



Explain the differences in the short
-
run and long
-
run Phillips curves.



Explain the
role of expected inflation in the economy.



Understand the difference between adaptive and rational expectations.



Explain how time inconsistency gives the Federal Reserve a credibility problem.



Dif
ferentiate between political and real business cycles.



Use the government budget constraint to demonstrate the link between monetary and fiscal
policies.


Chapter 16



Describe the Keynesian model of economic theory.



Describe the monetarist model of economic theory.



Describe the classical and new classical models of economic theory.



Describe the policymakers’ role in each of these theories.


Chapter 17



Define economic growth.



Use the rule of 72 to determine the number of years required for an amount to double.



Calculate per capita real GDP.



List the determinants of long
-
run g
rowth of an economy.



Calculate growth rates.



Define total factor productivity (TFP).



Discuss determinants of productivity.