INTRODUCTION: TEACHING STRATEGIES:
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1 Course Code: ECON 2002 Course Title: Intermediate Macroeconomics I Level: 2 Semester: 1(September December 2013) No. of Credits: 3 Pre-requisite(s): ECON 1001and ECON 1002 INTRODUCTION: We warmly welcome you to this course: ECON 2002-Intermediate Macroeconomics I! We do hope that you are enthusiastic and committed to hard work all of which will ensure your success in this course. This course offers you the opportunity to advance your knowledge and application of macroeconomic theory. You MUST attend all lectures and tutorial sessions! Follow a routine that suits you best and this will prove to be a manageable and intellectually rewarding experience. Please remember that we are always willing to assist you throughout your journey, do not hesitate to contact us either via or during office hours. Good luck and hope you enjoy this course! TEACHING STRATEGIES: The course delivery will take the form of a weekly lecture supported by a weekly tutorial. The two (2) hour lectures will be delivered via PowerPoint presentations, which correspond to the chapters covered in the main textbook. The lecturer encourages student participation during classroom discussions and welcomes feedback from students. Tutorial classes will be based on tutorial sheets, which will be accessed via myelearning. Tutorials are meant to reinforce key concepts covered in lectures. Tutorial attendance is mandatory for ALL students. University regulations allow for students to be debarred from final examinations, if they do not attend at least 75% of tutorial classes. Student attendance will be monitored regularly to ensure that the regulation is enforced. COURSE ASSESSMENT: Mid-term Examination: 20% Final Examination 80% The final exam usually consists of four (4) questions. It is a combination of short notes, theoretical and calculation and/or graphical questions. The duration is 2 hours. 1 P age
2 COURSE DESCRIPTION: This is the first of a two (2) part series on Macroeconomics. This first part covers standard topics of mainstream macroeconomic theory. As an intermediate course, it builds on many of the ideas and concepts covered in introductory economics courses. The course examines topics such as: unemployment, money and inflation. Additionally, the course offers an introduction to economic fluctuations within the context of the IS-LM framework. Furthermore, stabilization policy and the problems of government debt and budget deficits are discussed. The model building approach is stressed throughout. The theory is supported by graphical representations and mathematical applications. The course will be delivered through lectures and complementary tutorial sessions. PURPOSE OF THE COURSE: This course is designed to deepen students understanding of modern mainstream macroeconomic theory and methods. It allows students to gain an appreciation of how economists use particular models in attempting to understand economic activity. COURSE CONTENT: I. INTRODUCTION: The Science of Macroeconomics (Chapter 1: N.G. Mankiw, 2010) o What macroeconomists study o How economists think The Data of Macroeconomics (Chapter 2: N.G. Mankiw, 2010) o Measuring the value of economic activity: GDP o Measuring the cost of living: The Consumer Price Index o Measuring Joblessness: The Unemployment Rate II. INCOME, UNEMPLOYMENT, AND INFLATION IN THE LONG-RUN: National Income: Where does it come from and where it goes (Chapter 3: N.G. Mankiw, 2010) o What determines the total production of goods and services? o How is national income distributed to the factors of production? o Determinants of the demand for goods and services? o Equilibrium of the supply and demand for goods and services Money and Inflation (Chapter 4: N.G. Mankiw, 2010) 2 P age
3 o What is money? o The Quantity Theory of Money o Seigniorage: The revenue from printing money o Inflation and Interest Rates o The Nominal Interest Rate and the Demand for Money o The social costs of inflation o Hyperinflation o The classical dichotomy Unemployment (Chapter 6: N.G. Mankiw, 2010) o The natural rate of unemployment o Real-wage rigidity and structural unemployment o Experiences in the labour market Introduction to Economic Fluctuations (Chapter 9: N.G. Mankiw, 2010) o Facts about the business cycle o Time horizons short run and long run o Aggregate demand o Aggregate supply o Stabilization policy III. SHORT-RUN ECONOMIC FLUCTUATIONS: Aggregate Demand I: Building the IS-LM Model (Chapter 10: N.G. Mankiw, 2010) o The goods market and the IS Curve o The money market and the LM curve o The short run equilibrium Aggregate Demand II: Applying the IS-LM Model (Chapter 11: N.G. Mankiw, 2010) o Explaining fluctuations in the IS-LM model o IS-LM as a theory of aggregate demand o The Great Depression Aggregate Supply and the Short-run Tradeoff between Inflation and Unemployment (Chapter 13: N.G. Mankiw, 2010) o Models of aggregate supply o The Phillips curve: Inflation and unemployment IV. MACROECONOMIC POLICY DEBATES: Stabilization Policy (Chapter 15: N.G. Mankiw, 2010) o Active and passive policies o Rules vs. discretion 3 P age
4 Government Debt and Budget Deficits (Chapter 16: N.G. Mankiw, 2010) o The size of government debt o Problems in measurement o The traditional view of government debt o The Ricardian view of government debt o Other perspectives on government debt GOALS/AIMS: This course aims to ensure that students are knowledgeable and competent in macroeconomic theory and its application. GENERAL OBJECTIVES: To make the course student-friendly and ensure the information is conveyed in a simple and comprehensive manner. To demonstrate the relevance of macroeconomics and its practical (real world) applications. To enhance students understanding of macroeconomic concepts and techniques. To ensure students know the main theories (e.g. IS-LM) and their graphical and mathematical representations. To lay the theoretical foundation for further work at third year and at the graduate level. RESOURCES: MAIN TEXTBOOK: N. Gregory Mankiw (2010). Macroeconomics, 7th Edition. New York: Worth Publishers. ( SOME OTHER USEFUL TEXTS: 1. Dornbusch and Fischer, Macroeconomics (4 th edition or later). 2. Abel, A. and Bernanke, B. S. (2001) Macroeconomics, 4th Edition, New York: Addison Wesley. Students can read other macroeconomics textbooks that are available online or at the library. 4 P age
5 DEPARTMENTAL EVENTS: 1. Attendance at the Post National Bud get Forum: students are advised to check the Departmental Website ( after the annual presentation of the National Budget in the Parliament: 12 th September, Attendance at the Department of Economics Conference on the Economy (COTE): October 10-11, Attendance at Demas/Rampersad Seminar Series: students can refer to the Departmental website and announcements will be made in class. ADDITIONAL INFORMATION: REGULATIONS: Please refer to the Examinations Booklet (available online) for information on the following regulations: General Examination Regulation: 19. Any candidate who has been absent from the University for a prolonged period during the teaching of a particular course for any reason other than illness or whose attendance at prescribed lectures, classes, practical classes, tutorials, or clinical instructions has been unsatisfactory or who has failed to submit essays or other exercises set by his/her teachers, may be debarred by the relevant Academic Board, on the recommendation of the relevant Faculty Board, from taking any University examinations. The procedures to be used shall be prescribed in Faculty Regulations. Cheating: 97. (i) Cheating shall constitute a major offence under these regulations. (ii) Cheating is any attempt to benefit one s self or another by deceit or fraud. (iii) Plagiarism is a form of cheating (iv) Plagiarism is the unauthorized and/ or unacknowledged use of another person s intellectual effort and creations howsoever recorded, including whether formally published or in manuscript or in typescript or other printed or electronically presented form and includes taking passages, ideas or structures from another work or author without proper and unequivocal attribution of such source(s), using the conventions for attributions or citing used in this University. 5 P age
6 103. (i) If any candidate is suspected of cheating, or attempting to cheat, the circumstances shall be reported in writing to the Campus Registrar. The Campus Registrar shall refer the matter to the Chairman of the Campus Committee on Examinations. If the Chairman so decides, the Committee shall invite the candidate for an interview and shall conduct an investigation. If the candidate is found guilty of cheating or attempting to cheat, the Committee shall disqualify the candidate from the examination in the course concerned, and may also disqualify him/her from all examinations taken in that examination session; and may also disqualify him/her from all further examinations of the University, for any period of time, and may impose a fine not exceeding Bds$ or J$ or TT$ or US$ (according to campus). If the candidate fails to attend and does not offer a satisfactory excuse prior to the hearing, the Committee may hear the case in the candidate s absence. LECTURER S IN-CLASS RULES: Please turn off or switch mobile phones to vibrate or silent modes during classes. Please pay attention and ask questions whenever you are unsure about a topic that is being taught (do not wait until the last minute to make your concerns known). Please do refrain from any distracting behavior or activities during class time. HOW TO APPROACH THIS COURSE: Attend ALL lectures. Please don t disregard the importance of these sessions! Read the required chapters BEFORE classes and ensure you understand the course material. Ask questions don t be afraid to approach the lecturers or tutors to address any concerns you may have we re here to assist you! Attend tutorials and attempt ALL questions this is a way to personally assess whether you understand what is being taught in lectures. Attempt past paper questions after the completion of each topic this helps you become more familiar with the material and the requirements of the exam. Practice makes perfect! Always begin studying early don t procrastinate! 6 P age
7 COURSE SCHEDULE: WEEK TOPICS 1 Introduction to the course: course overview, requirements. The Science of Macroeconomics 2 The Data of Macroeconomics 3 National Income 4 Money and Inflation 5 Unemployment 6 Introduction to Economic Fluctuations 7 Aggregate Demand I: Building the IS-LM Model 8 Mid-term (October 21 st or 28 th : TO BE CONFIRMED) 9 Aggregate Demand II: Applying the IS-LM Model Aggregate Supply and the Short-run Tradeoff between Inflation and 10 Unemployment 11 Stabilization Policy 12 Government Debt and Budget Deficits 13 Review Session 7 P age
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