Economics 100 Principles of Macroeconomics Summer Session II ...

Economics 100 Principles of Macroeconomics Summer Session II, 2011 Monday through Friday. 10:10 to 12:00 Buttrick 202

Greg Niemesh Calhoun 413A [email protected]

Required Materials Text: N. Gregory Mankiw, Principles of Macroeconomics 6th ed., South-Western CENGAGE Learning, (2011). I suggest purchasing the digital e-book edition directly from the CENGAGE website: http://tinyurl.com/3pnrs34 . It will cost you $90. Amazon has the paperback edition listed for $150, with a $92 buyback. It really doesn’t matter to me how you get a copy of the book. The bookstore will have a few copies for sale at $190 (I think). If you decide to purchase your textbook through an online retailer and won’t receive it for a few days, I have placed a copy of the textbook on course reserve at the Central Library. Because we will be reading a chapter a day, the entire class cannot rely on the reserve copy. Let me know if you have any troubles obtaining the text. Twitter Feed: @ProfNiemesh . I’ll tweet interesting articles on macroeconomics using this account. If you do not already have an account, you can set one up by following the directions at twitter.com. This is my professional twitter account that I use for classes. (Piece of Advice: In the future, I suggest you get two or more accounts: one to share with friends and family, and another for professional contacts.) Course website: Go to www.vanderbilt.edu/oak and log in to Blackboard. Then go to Economics 100. Office Hours: MWR 1:00-2:00pm (by appointment if you can't make the scheduled hours) Location: Calhoun 413A This course is an introduction to the economic way of thinking and to economic analysis. The goal of the course is to enable you to read articles in daily newspapers and business publications and view business television and radio programs, with a new ability to understand the content and evaluate the accuracy of the economic analysis. Above all, our goal will be to expand your abilities to think carefully and objectively about the world around us. The course discussions and readings will focus on analysis of how markets allocate our resources. We will consider markets for goods and services, labor, land, capital, and financial instruments. The course will examine markets that fail to make us as well-off as we can possibly be and we will look for solutions to those failures. In addition, we will see that even some of the solutions will fail. There will be definitions and concepts to learn, but achieving the true purpose of the course will require you to think through relationships and to be able to analyze events in markets, understand problems, recommend solutions where appropriate, and explain exactly how those proposals might work. You will be asked to do simple algebra and use graphs to summarize major concepts and relationships. If understanding and using graphs are difficult for you, read the appendix to chapter 2 in the textbook and ask for additional help. However, the most important thing to learn and the emphasis on the exams will be for you to explain economic analyses carefully and in a manner understandable to someone who

has not had an economics course. Reading the assignments, working on the questions and problems, and taking the practice exams are essential. Economics is not a discipline that can be learned the night before an exam. The course will meet five times each week. The reading assignments for each day of the semester are listed in this syllabus. It is imperative that you read the chapters, attempt the homework problems, and review notes from the previous class before coming to class. You, the students, will be playing an integral part in the lectures. The format for a typical class will consist of a short overview of the topics covered in the assigned chapter. At this point, students should be sure to ask questions about the parts of the chapter they found difficult or unclear. My job as the professor will be to help guide you through the text and clear up any problems you may run into. Following the lecture portion of class, together we will solve a series of increasingly nuanced problems. Next, we will apply the theories from the reading to real-world issues in the macroeconomy. Review sessions will be held prior to exams to answer questions and assist you in understanding particularly difficult parts of the course. I will be available during regular office hours and by appointment to discuss any parts of the course. The best way to reach me is by email. Evaluation and Grades: 3 Exams (20% each) Homework (10%) Short Paper & Participation in Federal Reserve Board of Governors Meeting (25%) Class Attendance (5%) Exams: One function of higher education is to certify that a student meets or exceeds a given standard of learning (i.e. passed classes and awarded a degree). The in-class exams will serve this purpose for the course. Three exams will be given during the session on all of the material covered to that point in the course. You will have the entire class period to take the exam. The days of the exams are Thursday, July 21st & Tuesday, August 2nd, and Friday, August 10th. There will be no make-up examinations. Please plan your schedule accordingly. If you must miss an exam, please talk to me in the first few days of class to make arrangements. Notice we do not have an exam scheduled in the first week. I will give you a practice exam to take home on the first Friday. This will give you a chance to see how exams are structured and the depth of understanding required. Each exam will be half multiple choice and half essay. Homework: Homework will be assigned periodically and will be marked for completion and effort (i.e. you must show your work but will not be taken off for incorrect answers). The only way to learn economics is to apply the concepts in a number of different settings. The purpose of the homework is to get you to apply economics concepts. I will hand out sample answers for assigned homework so you can selfevaluate the extent of your understanding. Everyone learns at a different pace. The assigned homework problems might not be enough for you. At the end of each chapter you will find additional practice questions. I suggest completing however many problems you find necessary to be comfortable with the material. I can provide additional practice questions by request. Paper The paper will be a culmination of what we accomplished over five weeks. On the first day of the class, you were asked to read “American Economic Policy: Running out of road” a briefing in The Economist

(June 14th, 2011) on the current situation of the macroeconomy. You probably could not tell heads or tails of what this article was saying. By the end of the class you will have learned the theory and techniques to analyze and understand this article. The paper assignment is for you to use the theory to analyze (both graphically and with words) the arguments and ideas discussed in the economist article. The purpose of the paper is to get you to apply the tools learned in class to a real world problem that you are interested in. The goal of the class is to get you to a level where you can read the popular economics press and make informed judgments and decisions on economic policy. Further instructions on the paper assignment will be given as the class progresses. The paper is due on the final day of class. Federal Reserve Board of Governors Meeting There are 12 district banks in the Federal Reserve System. Each of which tracks the stability of the banking system and economies in their region. They also have a special research function. For example, the Philadelphia Fed constructs an inflation expectations measure, the Chicago Fed constructs a manufacturing output indicator, and the Dallas Fed has a large research staff devoted to international trade and finance. The Federal Reserve Board of Governors holds frequent meetings to determine the course of monetary policy. They use monetary policy in an effort to keep the economy out of a recession and help it grown. The Fed is also mandated to keep inflation low. This is called the “dual mandate” from Congress, keep employment high and inflation low. The assignment will consist of two parts. A research paper and a presentation and debate at the Board Meeting. Each of you will represent the President of one of the district banks. Paper: (single spaced) Due on August 11th. 1.) A half page on what the special research function is for your district bank. Include, what that research says about how the economy is faring today. 2.) A half page on how the economy in your district is faring. 3.) A full page on YOUR OWN ANALYSIS of what the Fed should do to help the economy. Board Meeting: A 5-minute presentation covering the sections of your paper and giving your recommendation for what the Board should do. A discussion and debate will follow everyone’s presentation. I will only be playing a coordinating role for this. It is up to the class to participate in the discussion. I will be grading on the quality of your presentation and your level of participation in the discussion. I am intentionally leaving the assignment very open-ended. The purpose is for you to improve your skills on deciding what is relevant and important to the issue. Also, you will have to search and find the germane information yourself. This is what a real job will be like. Your boss will say, “Should we do X or Y?” It will be your job to figure out what information is necessary to make a decision and go and find it. This seems to be a sticking point for many newly minted graduates. So I aim to give you a chance of trying it out in a low-stakes environment. Attendance: Students are expected to attend every class. Lecture material is covered on the exam, and not necessarily covered in the book. If you have to miss a class, you are encouraged to get notes from a classmate. Honor Code

Vanderbilt's Honor Code will apply to all assignments in this course. You are encouraged to study with your colleagues in the course and to discuss assignments, problems, and upcoming exams and papers. However, when you take exams, you are expected to do your own work. Books, notes, and the work of others are not to be used during exams. The papers are to be your own work. Significant sources, ideas, and quotations should be referenced.

Class Outline Subject

Dates

Readings:

Tuesday

Jul 12

Introduction/ Thinking Like an Economist

Ch. 1 & Ch. 2

Wednesday

Jul 13

Interdependence and the Gains from Trade

Ch. 3

Thursday

Jul 14

The Market Forces of Supply and Demand

Ch. 4

Friday

Jul 15

Elasticity

Ch. 5

Monday

Jul 18

Elasticity

Ch. 5

Tuesday

Jul 19

Supply, Demand, and Government Policies

Ch. 6 & Ch. 7

Wednesday

Jul 20

Taxation

Ch. 7 & Ch. 8 & Review

Thursday

Jul 21

EXAM 1 – Basic Tools

Friday

Jul 22

Measuring a Nation’s Income: GDP

Ch. 10

Monday

Jul 25

Measuring the Cost of Living

Ch. 10 & Ch. 11

Tuesday

Jul 26

Production and Growth

Ch. 12

Wednesday

Jul 27

Saving, Investment, and the Financial System

Ch. 13

Thursday

Jul 28

The Basic Tools of Finance / Unemployment

Ch. 14 & Ch. 15

Friday

Jul 29

The Monetary System

Ch. 16

Monday

Aug 01

Money Growth and Inflation

Ch. 17 & Review

Tuesday

Aug 02

EXAM 2 – Macro in Long Run

Wednesday

Aug 03

Aggregate Demand and Aggregate Supply

Ch. 20

Thursday

Aug 04

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Ch. 21

Friday

Aug 05

The Short-Run Trade-off between Inflation and Ch. 22 Unemployment

Monday

Aug 06

International Trade

Ch. 9

Tuesday

Aug 07

Open-Economy Macroeconomics: Basic Concepts

Ch. 18

Wednesday

Aug 08

A Macroeconomic Theory of the Open Economy

Ch. 19

Thursday

Aug 09

Federal Reserve Board Meeting / Review

Friday

Aug 10

EXAM 3 – Macro – Business Cycles

* Additional readings may be assigned. They will be testable. ** Syllabus subject to change. The exam and paper dates will not change.