ECN2801G, PRINCIPLES OF MACROECONOMICS
Dr. ALI R. MOSHTAGH
2371 COLEMAN HALL
(217) 581 - 2916
amoshtagh@eiu.edu
OFFICE HOURS: 11:00 - 11:50
am MWF, 8:30 - 9:20 am TR
COURSE DESCRIPTION:
A short
introduction followed by a discussion of the causes and cures of inflation and
unemployment.
COURSE OUTLINE:
PART 1: The Basics
of Economic Analysis
A.
INTRODUCTION
- What
is Economics?
- Natural Resources: Renewable and Nonrenewable Resources
- The Concepts of:
- Insatiable Wants
- Scarcity and Choice
- The Value of Economic Model Building
- Common Features of Economic Models:
- Ceteris Paribus
- Optimization
- Distinction Between Normative and Positive Economics
- Macroeconomics Vs. Microeconomics
- Working
with Graphs
B. PRODUCTION
POSSIBILITIES AND OPPORTUNITY COST
- Fectors of Production
- Production Possibilities
- Opportunity Cost
- The Law of Increasing Costs
- Technological Change and Economic Growth
- Division of Labor and Specialization
- Why Do Nations Trade
- Principles of Absolute Advantage and Comparative Advantage
C. THE
PRICE SYSTEM
- The Law of Demand
- The Law of Supply
- Market-Day, Short-Run, and Long-Run Supply
- Market
Equilibrium
- Changes in Demand
- Changes in Supply
- Exmaples
PART 2:
Employment, Inflation, and Fiscal Policy
D. INTRODUCTION
TO MACROECONOMICS
- Macroeconomic
Goals
- The Business Cycle
- Measuring the National Economy
- What is Inflation?
- The Consumer Price Index (CPI)
- GDP Deflator
- Nominal GDP vs. Real GDP
- The Aggregate Demand and Supply Model
- Macroeconomic Equilibrium
E. MACROECONOMIC
MEASUREMENTS
- Gross Domestic Product (GDP)
- The Expenditure Approach
- The Income Approach
- What is NOT Included in GDP
- Per Capita GDP
- Other National Income Accounting Measurements
- Net Domestic Product (NDP)
- Personal Income (PI)
- Disposable Personal Income (DPI)
- Real
GDP vs. Nominal GDP
- Example
One
- Example
Two
F.
CONSUMPTION AND INVESTMENT
- What Determines Consumption Spending?
- Absolute Income Hypothesis
- Relative Income Hypothesis
- Permanent Income Hypothesis
- Life-Cycle Income Hypothesis
- The Consumption Function
- The Saving Function
- The Investment Function
G. EQUILIBRIUM
NATIONAL INCOME
- The Aggregate Expenditure Function
- Equilibrium Level of Income
- Net Impact of Foreign Trade on National Income Equilibrium
- The Income Multiplier
- Converting Aggregate Expenditure to Aggregate Demand
- The Paradox of Thrift
H. FISCAL
POLICY: COPING WITH INFLATION AND UNEMPLOYMENT
- Unemployment
- The Frictional Unemployment
- The Structural Unemployment
- The Cyclical Unemployment
- The Natual Rate of Unemployment
- Understanding Inflation
- GDP Gap
- Recessionary Gap
- Inflationary Gap
- Making Fiscal Policy
- Assignment
I. LONG-RUN
ECONOMIC GROWTH
- What Causes Economic Growth?
- The Capital Deepening Model of Economic Growth
- Technology and Labor Productivity
- Labor Productivity and Economic Growth
PART 3: Money, Banking, and Monetary Policy
J. MONEY
- The Functions of Money
- Defining the Money Supply
- The Quantity Theory of Money
- The Classical View
- Monetarism: A Modification of the Classical View
- The Keynesian View
- The Demand for Moeny
K. MONEY
CREATION AND THE BANKING SYSTEM
- How Banks Create Money
- Reversing the Money Creation Process
- Safegaurding the System
L. THE
FEDERAL RESERVE SYSTEM AND MONETARY POLICY
- The History of Banking in the U.S.
- The Federal Reserve System
- Organizational Structure of the Federal Reserve System
- Controling the Money Supply
- Controling the Interest Rate
- The Fed's Countercyclical Monetary Policy
PART 4: Government and the Macroeconomy
M.
CAN GOVERNMENT REALLY STABILIZE THE ECONOMY?
- The Classical School of Employment and Inflation
- The Keynesian School of Employment and Inflation
- The Neo-Keynesian School of Employment and Inflation
- The Rational-Expectation School of Employment and Inflation
- The Supply-Side School of Employment and Inflation
- Is There a Macro Consensus?
N.
GOVERNMENT SPENDING
- Public Goods
- Merit Goods
- Transfer Payments
O.
FINANCING GOVERNMENT: TAXES AND DEBT
- Commandeering Resources
- Commandeering Money (Taxes)
- Regressive, Proportional, and Progressive Tax Structure
- Social Security Taxes
- Government Securities and Public Debt
- Internally and Externally Financing the Public Debt
PART 5: The World Economy
P. INTERNATIONAL
TRADE
- Absolute Advantage
- Comparative Advantage
- Free Trade
- Tariffs
- Quotas
- Cusom Unions
- Free Trade Areas
Q. EXCHANGE
RATES, BALANCE OF PAYMENTS, AND INTERNATIONAL DEBT
- Exchange Rates
- Foreign Exchange Markets
- Appreciation and Depreciation of Currencies
- Exchange Rate Management Systems
- Floating Exchange Rate System
- Fixed Exchange Rate System
- Exchange Arbitrage
- Balance of Payments
- International Debt and Debt Service
R. THE
ECONOMIC PROBLEMS OF LESS-DEVELOPED ECONOMIES
- Poverty in the Less-Developed Countries (LDCs)
- Economic Dualism
- Pursuing Strategies of Development
- The Big Push Strategy
- The Unbalanced Development Strategy
- Foreign Direct Investment and Economic Aid
METHODS OF EVALUATION:
4 Examinations @ 100 Points Each: 400 Points
- Exam One, 12 September, 2012
- Exam Two, 10 October, 2012
- Exam Three, 7 November, 2012
Homework and In-Class Assignments: 30
Final Exam, Section 003: Tue., December 11, 2012, from 8:00
am - 10:00 am
Section 004: Tue., December 11, 2014, from 10:15 am to 12:15
pm
Total 430 Points
TEXTBOOK:
Fred M. Gottheil, Principles of Macroeconomics, Sixth Edition, CENGAGE
Learning, Mason, OH, 2009
YOU MUST BRING YOUR BOOKS TO CLASS!
NOTE
1:
No exam grades will be eliminated. No exams will be made
up unless arrangements have been made PRIOR TO THE SCHEDULED
EXAM DATE. Messages left on my voice mail will not be considered as
proper arrangements.
NOTE 2:
If you have a documented disability and wish to receive academic accommodations,
please contact the Coordinator of the Office of Disability Services (581-6583)
as soon as possible.
NOTE 3:
"Each faculty member has the authority to establish the conditions for
student cell phone use in his/her classroom. These conditions are at the discretion
of the faculty member, but will provide that a university-initiated campus security
text message can be received and disseminated to those in the classroom in a
timly manner." Eastern position on cell phones in classrooms.
My position on cellphones: there is absolutely NO
TEXTING allowed in class, you may NOT hold
your cellphones in your hands in class, and you may
NOT use your cellphones as calculators during exams.
SPECIAL DATES IN THE FALL TERM 2012 CALENDAR
Classes Begin: August 20, 2012
Last Day to Drop a Course With No Grade: August 31
W for Course Withdrawal Beings: September 1
Labor Day Observance-No Classes: September 3
Fall Break: October 5
Mid Term: October 10
Last Day to Withdraw from a Course or University with W: November 2
Thanksgiving Break: November 19 - 23
Last Class Day: December 7
Final Examinations: December 10 - 14
Deadline to Return Books/TRS/No Fine 3 p.m.: December 14
Commencement: December 15
Tutor Schedule