Introduction to Macroeconomics


Table of Contents

Week Topic(s) Learning Objective(s) Reading(s) Assignment(s)
1 Introduction to Macroeconomics · LO 1: Describe the characteristics of demand and supply, and apply the demand and supply model.

· LO 2: Define real gross domestic product and identify the phases of a business cycle.

· LO 3: Define inflation and deflation, and explain how each affects the price and economic growth of an economy.

· LO 4: Articulate why the price-level changes and how it can affect economic stability.

· LO 5: Explain how unemployment is calculated and measured in the United States.

· LO 6: Demonstrate an understanding of the role of the government in the economy.

· LO 7: Identify the components of the macroeconomy and relate them to the circular flow diagram. Describe the characteristics of demand and supply, and apply the demand and supply model.

Unit 1

DQ1: Self Introduction and Understanding Plagiarism.

DQ2: The three primary concerns in macroeconomic analysis.

Please submit your responses to DQ1 and DQ2 to the Forum Section.

2 Measuring Aggregate Output · LO 8: Describe the measurement of GDP using the expenditure approach and the income approach.

· LO 9: Explain the other measures of output and income and learn their distinction from one another.

· LO 10: Distinguish between the real and nominal values.

· LO 11: Analyze the problems associated with using GDP as a measure of well-being.

· LO 12: Describe the neo-classical theory of national income.

Unit 2

DQ3:GDP as a measure of economic activity and well-being.

Please submit your response to DQ3 to the Forum Section.

Quiz 1: Units 1 & 2

3 Unemployment and Inflation · LO 13: Define the unemployment rate.

· LO14: Identify and distinguish between the different forms of unemployment.

· LO15: Analyze the problems associated with the unemployment rate.

· LO 16: Define, interpret, and calculate inflation rate and the consumer price index.

· LO 17: Describe the problems and biases associated with the consumer price index.

· LO 18: Explain the Phillips curve and the relationship between inflation and unemployment.

Unit 3

DQ4: Three types of unemployment

Please submit your response to DQ4 to the Forum Section.

Quiz 2: Unit 3

4 Aggregate Demand and Supply · LO 19: Define aggregate demand, graphically represent a hypothetical aggregate demand curve, and identify the reasons for the negative slope of the demand curve.

· LO 20: Distinguish between a change in the aggregate quantity of goods and services demanded and a change in aggregate demand.

· LO 21: Define “multiplier” and explain how to calculate it.

· LO 22: Graphically represent a hypothetical long-run aggregate supply curve and explain the underlying connotations for natural levels of employment and output at various price levels, given changes in aggregate demand.

· LO 23: Graphically represent a hypothetical short-run aggregate supply curve, explain why it slopes upward, and explain why it may shift.

· LO 24: Discuss various explanations for wage and price stickiness.

· Explain and illustrate what is meant by equilibrium in the short run and relate the equilibrium to potential output.

· LO 25: Explain and graphically represent the consumption function and the saving function, explain the slopes of their respective curves, and explain their relationship to each other.

· LO 26: Compare the current income hypothesis with the permanent income hypothesis.

· LO 27: Discuss two factors that can cause the consumption function to shift upward or downward.

Unit 4

Research Paper 1: This paper deals with the analysis of deficit spending, its advantages and disadvantages, as well as the effects of federal government borrowing on the economy i.e., the “crowding out” effect.

Please submit your paper to the Assignment Section.

5 Government and Fiscal Policy · LO 28: Demonstrate an understanding of the major components of U.S. government spending and sources of government revenues.

· LO 29: Define the terms budget surplus, budget deficit, balanced budget, and national debt, and discuss their trends over time in the United States.

· LO 30: Compute Government Spending Multiplier, the Tax Multiplier, and the Balanced Budget Multiplier.

· LO 31: Define automatic stabilizers and explain how they work.

· LO 32: Explain and graphically illustrate how discretionary fiscal policy works and compare the changes in aggregate demand that result from changes in government purchases, income taxes, and transfer payments.

· LO 33: Explain how the various kinds of lags influence the effectiveness of discretionary fiscal policy.

· LO 34: Explain and graphically illustrate how crowding out (and its reverse) influence the impact of expansionary or contractionary fiscal policy.

· LO 35: Discuss the controversy concerning which types of fiscal policies to use, including the arguments from supply-side economics.

Unit 5

DQ5: “Paradox of Thrift”

Please submit your response to DQ5 to the Forum Section.

Quiz 3: Units 4 & 5

6 The Money Supply and the Monetary Policy · LO 36: Define money and discuss its three basic functions.

· LO 37: Distinguish between the types of money, i.e. between commodity money and fiat money, giving examples of each.

· LO 38: Define money supply and the related definitions of it (M1 and M2).

· LO 39: Explain the functions of a bank and describe a bank’s balance sheet.

· LO 40: Describe the process of money creation (destruction) using the concept of the deposit multiplier.

· LO 41: Explain the primary functions of the central bank and describe the tools used by the Fed for money market operations.

· LO 42: Explain and illustrate how the bond market works and discuss the relationship between the price of a bond and that bond’s interest rate.

· LO 43: Explain and illustrate the relationship between a change in demand for or supply of bonds and macroeconomic activity.

· LO 44: Explain and illustrate how the foreign exchange market works and how a change in demand for a country’s currency or a change in its supply affects macroeconomic activity.

· LO 45: Draw a money demand curve and explain how changes in other variables may lead to shifts in the money demand curve.

· LO 46: Use graphs to explain how changes in money demand or money supply are related to changes in the bond market, in interest rates, in aggregate demand, and in real GDP and the price level.

Unit 6

DQ6: Objectives of monetary policy

Please submit your response to DQ6 to the Forum Section.

Quiz 4: Units 6

7 Economic Growth · LO 47: Define economic growth and describe the determinants of economic growth.

· LO 48: Distinguish between, describe, and analyze the classical, neoclassical, and endogenous theories of economic growth.

· LO 49: Learn the closed economy Solow model.

· LO 50: Explain how a country’s standard of living depends on its saving and population growth rates.

· LO 51: Apply the “Golden Rule” to find the optimal savings rate and capital stock.

Unit 8

DQ7: Limits to the U.S. long-term economic growth

Please submit your response to DQ7 to the Forum Section.

Quiz 5: Unit 8


International Trade

· LO 52: Explain the importance of studying trade.

· LO 53: Describe Adam Smith’s theory of absolute advantage and explain how it is calculated.

· LO 54: Describe the Ricardian model of trade and analyze its implications for trade.

· LO 55: Describe the Heckscher-Ohlin model of trade and analyze its implications for trade.

· LO 56: Identify tariffs and quotas in international trade.

· LO 56: Analyze the effects of tariffs and quotas.

Unit 10

Course Reflection: Please (1) describe how you feel this course has helped you to improve your economic knowledge and analytical skills, and (2) assess the course objectives you still do not understand and suggest how to improve the course to meet those objectives.

Please submit your course reflection comments to the Forum Section.

Research Paper 2:

This research paper deals the fiscal and the monetary policies adopted by the federal government during the Great Recession and their impacts on the U.S. economy.

Please submit your paper to the Assignment Section.