Eastern Illinois University

**Econ 4801: Intermediate Macroeconomic Theory**

Spring 2003; MWF 9:00-9:50, Coleman 2160

**Instructor:** Mukti P. Upadhyay, CH2811, 581-3812, cfmpu@eiu.edu

Office Hours: MWF 11(12, also by appointment

**Textbook:** Dornbusch, Fischer, and Startz: Macroeconomics; 8th edition, McGraw Hill, 2001.
Recommended Supplement: Rutledge: Study Guide to accompany Dornbusch et al.

**Course Grade:** Your overall course grade will depend on a combination of the following:

100: In-class exercises, quizzes and a presentation

200: Homework Assignments (best 5 of ?)

200: 3 Term Exams (2 out of 3 retained; see below)

100: Final Exam

** 600: Total Points**

You are guaranteed an A grade for the course if your total score is
90% or higher, B if 80%+, C if 70%+, D if 60%+. If this pattern, however,
results in a bad distribution of grades (such as nobody receiving an A,
or many receiving less than 60), then I will curve the grades, for the
benefit of students. You may gain from such a change in the grading
procedure but will certainly not lose.

**Homework Assignments:** About six or seven problem sets will be
assigned. I cannot overemphasize the importance of these homework
problems. You must do them if you really want to do macro instead of
merely acquiring a superficial understanding of concepts. Be prepared
for a lower grade if you fail to hand in two or three homework
assignments. This is not simply because each homework counts for at least
5 percent of the total grade. Since homework problems will feed into the
exams pretty heavily, not doing homework will very likely reduce your
ability to do well in quizzes and exams. Each set of problems will draw
from about two weeks of class material. While evaluating the overall
grade for the course, I will drop the one homework in which you have the
lowest score, provided you have handed in solutions to each set. Homework
assignments are due at 9am on the due dates, i.e., at the start of the
class. I will only accept late assignments for one additional day for a
50% penalty.

**Exams:** There will be three exams during the semester and one
final exam. I will drop the worst of the three term exams. You will have
an option of not taking the final exam if you are happy with your grade
before the worst of the three exams is dropped. The final exam will be
comprehensive except for some specific chapters that I will exclude. The
format of all the exams will be the same. You will need to answer some
analytical questions, solve some problems involving numbers, and in the
case of true-false questions provide an explanation for why you think
they are true or false. Wherever appropriate, you will need to draw a
diagram to enhance the quality of your answer. I strongly discourage you
to request for a makeup, which, if given at all, will take place only on
the last day of the class. Naturally, to ensure fairness to all, the
makeup will be tougher than the midterms as you will have mastered the
old material by the time of Finals.

*Exam schedule --*

Exam 1: February 21, Friday

Exam 2: March 28, Friday

Exam 3: April 28, Monday

Final Exam: May 7, Wednesday, 8-10am

**Presentation:** Your class presentation will take place in April
and will weigh about 50 points. You must read at least two significant
articles and get them approved a week or two in advance. Each group of
about 3 students will receive a topic to do some research on pertinent
articles and collect data. You must hand out a one-page summary and
provide some form of visual aid during presentation. Examples of visual
aid include charts and/or tables on transparencies or Powerpoint.

**Study tips:** After reading each chapter, try to do as many
questions and problems at the end of the chapter as possible. It is by
working the problems, rather than simply reading the text, that you will
learn economics. In addition, think of examples, other than those in the
book, where the newly learned tools can be applied. Develop a habit of
reading a good newspaper and a weekly magazine, such as the *Economist*
(for which I see no substitute), to keep abreast of major macro (domestic
and international) issues. We will discuss many of these in class as well.

**Attendance:** Economists believe that people make choices after
evaluating all the relevant alternatives. It may be your choice to come,
or not to come, to class on any given day. But research shows pretty
clearly that students who regularly attend class earn significantly
higher grades than those who do not. In addition, we will do in-class
exercises frequently to help reinforce the major points covered in
lectures, and as a guide to doing homework problems. Not doing these
exercises will prove to be a great disadvantage to you. Finally, I will
also take attendance from time to time to see the level of interest and
participation in class.

**Disabilities:** If you have a documented disability, please contact me as soon as possible so we can make necessary accommodations.

**Course outline:**

The textbook contains 20 chapters of which we will do about 13. To limit
the course to manageable length, we will skip some sections in various
chapters. While deviations are sure to occur, I intend to follow the
weekly schedule of topics as follows:

Week 1: Chapter 1+ Background (Intro to macro, demand-supply, curve shifting)

Week 2-3, Chapter 2: National income accounting

Week 4, Chapter 3: Growth and accumulation

Week 5, Chapters 3 & 4: Growth, accumulation, and policy

****** Exam 1 about here ******

Week 6, Chapters 5 & 9: Aggregate supply and demand, and the Keynesian cross

Week 7, Chapters 9 & 10: Keynesian cross and the IS-LM analysis

Week 8, Chapters 10 & 11: IS-LM-AS-AD model, and the analysis of shocks and policies

Week 9 (March 10-14): *SPRING RECESS: NO CLASSES*

Week 10, Chapter 6: Aggregate supply and the Phillips curve

****** Exam 2 about here ******

Week 11, Chapters 7 & 8: Sacrifice ratio, and costs of u & (; lags, expectations and uncertainty

Week 12-13, Chapter 12: Open economy macro in the long and short runs

Week 14 (April 7-11): Student Presentations (hopefully beginning Apr. 4th)

Week 15: Chapter 14: Md, Ms, and the appropriate target for the Fed

****** Exam 3 here ******

Week 16: Exam 3, Final Exam Review and Course Wrap-up

****** Final Exam: May 7, Wednesday, 8-10am ******