Prince William Sound Community College

Principles of Macroeconomics

Course Syllabus ECON 201

Credits:         3
Instructor:     Melissa Reese, 835-3066 melissa_reese@valdez.cc
Web Page:     http://www.alaska.net/~dreese/econ/econ201.htm
Date:             August 27, 2002

Course Description

This course is an introduction to economic theory. Macroeconomics explores the concepts behind national income, money, banking, public finance, taxation and international trade. The focus of the class is on capitalistic systems and the U.S. economy. Prerequisite: knowledge of basic algebra is recommended.

Objectives

Students will demonstrate their understanding of macroeconomic theory by their performance on examinations and their ability to apply macroeconomic principles by their written analyses of issues facing the modern American economy. On completion of the course, students should have a basic understanding of the economic problem, economic systems, the market economy, the factors, which affect aggregate economic activity, and the relevant institutions, which influence macroeconomic activity. The student should be able to demonstrate the use of this knowledge through explanation, application, and interpretation of economic issues.

Teaching Methodologies

This on-line introductory course emphasizes on-line and textbook assignments. Students will complete and e-mail assignments to the instructor. All assignments have firm due dates. Late assignments will not be accepted.

Evaluation Methodologies

Students must complete assignments on time to do well in this course.

Final Exam Mid-Term Exam Chapter Quizzes

20% 20% 60%

Required Text

Milller, Roger LeRoy. Economics Today The Macro View 2001-2002 Ed. Addison Wesley Longman, Inc. Boston. 2001. ISBN 0-321-07817-9

Miller, Roger LeRoy & VanHoose, David. Study Guide for Macroeconomics to Accompany Economics Today. Addison Wesley Longman, Inc. Boston. 2001. ISBN 0-321-08601-5

Recommended Resources

IBM-compatible or Macintosh computer for use with:

            http://www.econtoday.com

IBM-compatible computer for use with:

CD-ROM included with text

 

Objectives	Activities	Assignments
Chapter 1 - The Nature of Economics	Due Date - Sept. 6
Discuss the difference between macroeconomics and microeconomics.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Evaluate the role that rational self-interest plays in economic analysis.
Explain why economics is a science.
Distinguish between positive and normative economics.
Chapter 2 -Scarcity and the World of Trade-Offs	Due Date - Sept. 6
Evaluate whether even affluent people face the problem of scarcity.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Understand why economics considers individuals wants, but not their needs.
Explain why the scarcity problem induces people to consider opportunity costs.
Discuss why obtaining increasing increments of any particular good typically entails giving up more and more units of other goods.
Explain why society faces a trade-off between consumption goods and capital goods.
Distinguish between absolute and comparative advantage.
Chapter 3 - Demand and Supply	Due Date - Sept. 12
Explain the law of demand.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Discuss the difference between money prices and relative prices.
Distinguish between changes in demand (supply) and changes in quantity demanded (quantity supplied).
Explain the law of supply.
Distinguish between changes in supply and changes in quantity supplied.
Understand how the interaction of the demand for and supply of a commodity determines the market price of the commodity and the equilibrium quantity of the commodity that is produced and consumed.
Chapter 4 - Extensions of Demand and Supply Analysis	Due Date - Sept. 18
Discuss the essential features of the price system.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Evaluate the effects on the market price and equilibrium quantity of changes in supply and demand.
Understand the rationing function of prices.
Explain the effects of price ceilings.
Explain the effects of price floors.
Describe various types of government-imposed quantity restrictions on markets.
Chapter 5 - The Public Sector and Public Choice	Due Date - Sept. 24
Explain how market failures such as externalities might justify economic functions of government.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Distinguish between private goods and public goods and explain the nature of the free-rider problem.
Describe the political functions of government that entail its involvement in the economy.
Distinguish between average tax rates and marginal tax rates.
Explain the structure of the U.S. income tax system.
Discuss the central elements of the theory of public choice.
Chapter 6 - Your Future with Social Security	Due Date - Sept. 30
Identify the fundamental goals of Social Security and Medicare and the problems these programs pose for today s students.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Analyze how Medicare affects the incentives to consume medical services.
Explain why the Social Security Trust Fund is not a stock of savings we can draw on.
Identify the key forces that caused the tremendous rise in Social Security spending.
Understand why the situation in Europe is more serious.
Explain how Social Security can be reformed.
Chapter 7 - The Macroeconomy: Unemployment, Inflation, and Deflation	Due Date - Oct. 4
Explain how the U.S. government calculates the official unemployment rate.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Discuss the types of unemployment.
Describe how price indexes are calculated and review the key types of price indexes.
Distinguish between nominal and real interest rates.
Evaluate who loses and who gains from inflation.
Understand key features of business fluctuations.
Chapter 8 - Measuring the Economy s Performance	Due Date - Oct. 10
Describe the circular flow of income and product.,	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Define gross domestic product (GDP).
Understand the limitations of using GDP as a measure of national welfare.
Explain the expenditure to computing GDP.
Explain the income approach to computing GDP.
Distinguish between nominal GDP and real GDP.
Chapter 9 - Global Economic Growth and Development	Due Date - Oct. 16
Define economic growth.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes Mid-Term Test
Recognize the importance of economic growth rates.
Describe the fundamental determinants of economic growth.
Explain why productivity increases are crucial for maintaining economic growth.
Understand the basis for New Growth Theory.
Discuss the fundamental factors that contribute to a nation s economic development.
Chapter 10 - Real GDP and the Price Level in the Long Run	Due Date - Oct. 22
Understand the concept of long-run aggregate supply.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Describe the effect on economic growth on the long-run aggregate supply curve.
Discuss the meaning of long-run equilibrium for the economy as a whole.
Evaluate why economic growth can cause deflation.
Evaluate the likely reasons for persistent inflation in recent decades.
Evaluate the likely reasons for persistent inflation in recent decades.
Chapter 11 - Classical and Keynasian Macro Analysis	Due Date - Oct. 28
Discuss the central assumptions of the classical model.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Describe the short-run determination of equilibrium and read GDP and the price level in the classical model.
Explain circumstances under which the short-run aggregate supply curve may be horizontal or upward-sloping.
Understand the factors that cause shifts in the short-run and long-run aggregate supply curves.
Evaluate the effects of aggregate demand and supply shocks on equilibrium real output in the short-run.
Determine the causes of short-run variations in the inflation rate.
Chapter 12 -Consumption, Income, and the Multiplier	Due Date - Nov. 1
Distinguish between saving and savings and explain how saving and consumption are related.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Explain the key determinants of consumption and saving in the Keynesian model.
Identify the primary determinants of planned investment.
Describe how equilibrium national income is established in the Keynesian model.
Evaluate why autonomous changes in total planned expenditures have a multiplier effect on equilibrium national income.
Understand the relationship between total planned expenditures and the aggregate demand curve.
Chapter 13 - Fiscal Policy	Due Date - Nov. 7
Use traditional Keynesian to evaluate the effects of discretionary fiscal policies.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Discuss ways in which indirect crowding out and direct expenditure offsets can reduce the effectiveness of fiscal policy actions.
Explain why the Ricardian equivalence theorem calls into question the usefulness of tax changes.
List and define fiscal policy time lags and explain why they complicate efforts to engage in fiscal fine tuning.
Describe how certain aspects of fiscal policy function as automatic stabilizers for the economy.
Distinguish between government deficits and the public debt.
Chapter 14 - Money and Banking Systems	Due Date - Nov. 13
Define the fundamental functions of money.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Identify key properties that any good that functions as money must posses.
Explain the official definitions of the quantity of money in circulation.
Understand why financial intermediaries such as banks exist.
Describe the basic structure of the Federal Reserve System.
Discuss the major functions of the Federal Reserve.
Chapter 15 - Money, Payment Systems, and Deposit Insurance	Due Date - Nov. 19
Describe how the Federal Reserve assesses reserve requirements on banks and other depository institutions.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Understand why the money supply is unaffected when someone deposits in a depository institution a check drawn on another depository institution.
Explain why the money supply changes when someone deposits in a depository institution a check drawn on the Federal Reserve System.
Determine the maximum potential extent to which the money supply will change following a Federal Reserve purchase of sale of government securities.
Describe the structure of the U.S. payment system and the associated risks it poses for individual depository institutions and the banking system as a whole.
Explain the essential features of federal deposit insurance.
Chapter 16 - Electronic Banking	Due Date - Nov. 25
Distinguish among the functions of stored-value cards, debit cards, and smart cards.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Explain the importance of digital certification for the ultimate acceptability of digital cash.
Understand how on-line banking has developed and why regulators have given it special attention.
Consider how the widespread adoption of digital cash may affect the money multiplier and the money supply.
Chapter 17 - Domestic and International Monetary Policy	Due Date - Nov. 29
Identify the key factors that influence the quantity of money that people desire to hold.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes
Describe how the Federal Reserve s tools of monetary policy influences market interest rates.
Evaluate how expansionary and contractionary monetary policy actions affect equilibrium real GDP and the price level in the short-run.
Understand the equation of exchange and its importance in the crude quantity theory of money and prices.
Distinguish between the Keynesian and monetarist views on the transmission of monetary policy.
Explain why the Federal Reserve cannot stabilize both the money supply and interest rates simultaneously.
Chapter 18 - Stabilization in an Integrated World Economy	Due Date - Dec. 5
Explain why the actual unemployment rate might depart from the natural unemployment rate.	Read Chapter Study Guide Activities CD-ROM Activities	Chapter Quizzes Final Test
Describe why economic theory implies that there may be an inverse relationship between the inflation rate and the unemployment rate, reflected by the Phillips curve.
Evaluate how expectations affect the relationship between the actual inflation rate and the unemployment rate.
Understand the fundamental hypotheses of the new classical theory and their implications for economic policymaking.
Identify the central features and predictions of real business cycle theory.
Distinguish among alternatives new Keynesian theories of business fluctuations.