University of International Business and Economics International Summer Sessions ECON 105: Macroeconomics Term: May 30-June 24, 2016 Instructor: Peter Wylie Home Institution: University of British Columbia, Canada Email: peter.wylie@ubc.ca Class Hours: Monday through Friday, 120 minutes each day Office Hours: TBD Teaching Assistant: TBD Email: TBD Discussion session: TBD Total Contact Hours: 64 contact hours (45 minutes each, 48 hours in total) Credit: 4 units Course Description This course focuses on the analysis of aggregate economic activity with respect to the level, growth and stability of national income. We examine the major theories used by macro economists to analyze both national economies and the international economy. Topics include the measurement and explanation of aggregate economic performance, monetary and fiscal policies, business cycles, international trade, capital flows, and exchange rates. Students apply macroeconomic analysis to current policy-related topics such as unemployment, inflation, budget deficits, and trade balances. No Prerequisite Course Overview This is an introductory level course in economics. Economics is all around us, every day. One hundred years ago the famous economist Alfred Marshall called economics the study of mankind in the ordinary business of life. John Ferguson more recently stated Economics concerns itself with the greatest of all human dramas...the struggle of humanity to escape from want. Economics is the study of how to make choices among competing alternatives given scarce resources (and thus trade-offs) in order to improve our material well-being. It is hence a science of decision-making; the study of how people, institutions, and nations, as far as they are able to, manage their scarce resources (such as time, money and materials), how they make choices by comparing costs and benefits and act purposefully upon these choices, how they interact with each other, how their behavior reflects the incentives they face, and how they can change behavior in response to different incentives; all with the goal of living a better life. Economics chief strength comes from its analytical framework which enables us to understand and explain the world around us and help us improve this world. Economics is a way of thinking 1 / 6
about the world that improves our problem-solving and decision-making abilities. Mastering this course material will take some effort on your part, but it is not an overwhelming task. In Economics, a little knowledge goes a long way; a few basic ideas can be applied to many different situations. After taking this course, you should be able to read a newspaper and instinctively think about how economics applies to the situations and issues you read about. The overall learning objectives for the course are; 1. That you understand at an introductory level the basic principles of macroeconomics 2. That you are able to apply these basic principles to your everyday life and to your analysis of the world around you. 3. That you are able to discuss, using the principles of macroeconomics, policy debates involving macroeconomic issues such as economic growth, money and inflation, unemployment, interest rates, saving, investment and financial markets, government taxation, expenditures, deficits and debt, and the value of the national currency. Course Goals A student who satisfactorily completes this course should understand at an introductory level the basic principles of macroeconomics; and be are able to apply in their everyday life and in their analysis of the world around them these basic principles. There are seven sections of the course: 1: Fundamental Principles of Macroeconomics; this covers the principles productivity and growth, of monetary versus real economic variables; and of the circular flow of output, income and expenditure; 2: The Data of Macroeconomics; the measurement of Gross National and Domestic Product (GNP and GDP) the measurement of the cost of living (Consumer Price Index); the measurement of unemployment; 3: Principles of the Real Economy in the Long Run; production, productivity, growth and the standard of living; principles of savings, investment and the financial system; the basic tools of finance (time value of money, the management of risk and the risk-return tradeoff, and the valuation of assets); and the natural rate of unemployment; 4: Principles of Money and Prices in the Long Run; the definition and measurement of money; how the monetary and banking system works and the money creation process (money multiplier); the relationship between monetary growth and inflation in the long run; 5: Macroeconomic Principles of Open Economies; the principles of open economy macroeconomics; the current account, capital account and the balance of payments; nominal and real exchange rates and the definition and interpretation of real and nominal exchange rate movements (appreciation and depreciation); the purchasing power parity hypothesis; a basic macroeconomic theory of the open economy; 2 / 6
6: Principles of Short Run Macroeconomic Fluctuations; the basic aggregate demand and supply model; the long run and short run aggregate supply curve and the role of price level expectations; the influence of monetary and fiscal policy on aggregate demand (and supply); the government expenditure multiplier; the operation and efficacy of monetary and fiscal policy for closed and open economies and, for open economies under fixed versus flexible exchange rates; the short run trade-off but no long run trade-off between inflation and unemployment (the Phillips Curve in the short run and the long run); 7: Macroeconomic Debates; policy debates involving macroeconomic issues such as economic growth, money and inflation, unemployment, interest rates, saving, investment and financial markets, government taxation and expenditures, deficits and debt, and the value of the national currency; discretionary counter-cyclical versus stable monetary and fiscal policy; the zero inflation target debate; rules versus discretion in government budgetary policy; taxes and savings. Required Text N. Gregory Mankiw, Brief Principles of Macroeconomics: Sixth Edition South-Western, 2012. This book is available electronically on CourseSmart http://www.coursesmart.com/briefprinciples-of-macroeconomics/mankiw/dp/9780538453073. For students also taking Microeconomics with me this summer, you could alternatively purchase the combined text N. Gregory Mankiw, Principles of Economics: Sixth Edition. South-Western, 2012, also available electronically on CourseSmart, (http://www.coursesmart.com/principles-ofeconomics/mankiw/dp/9780538453059) which includes both Principles of Microeconomics and Principles of Macroeconomics, at a combined price which is less expensive than the 2 texts separately. These books are also available in US and international paperback editions, identical except for the covers. In addition to reading the textbook also see the website for the textbook http://www.cengage.com/economics/mankiw/edition_6/economics.html for extensive study tools and resources. Attendance Summer school is very intense and to be successful, students need to attend every class. Attendance will be recorded. Occasionally, due to illness or other unavoidable circumstances, a student may need to miss a class. Any unexcused absence may impact on the student's grade, and a student who has too many unexcused absences may fail the course. Moreover, UIBE policy is that a student who has missed more than one-third of the classes (6 class times) of a course will fail the course. Grading Policy In this course, grading will be based on the following: Class Attendance, Engagement and Participation 10% 3 / 6
Friday Quizzes 45% (3 quizzes, 15% each) Friday Assignments 15% (3 assignments, 5% each) Final Exam 30% (Friday June 24) 100% Grading scale: Assignments and examinations will be graded according to the following grade scale: A 90-100 A 85-89 B+ 82-84 B 78-81 B 75-77 C+ 72-74 C 68-71 C 64-67 D 60-63 F below 60 General Expectations: Students are expected to: Attend all classes and be responsible for all material covered in class and otherwise assigned. Any unexcused absence may impact a student's grade. A student who has more than 4 unexcused absences may fail the course Complete the day s required reading and assignments before class Review the previous day s notes before class; make notes about questions you have about the previous class or the day s reading Refrain from texting, phoning or engaging in computer activities unrelated to class during class Participate in class discussions and complete required written work on time Course Schedules The planned schedule sketched out below may be modified to suit the interests or abilities of the enrolled students or to take advantage of special opportunities or events that may arise during the term. 4 / 6
WEEK ONE (May 30 June 3): Fundamental Data and Principles of Macroeconomics Mon: Principles of Economics, Economic Thinking Chapters 1 and 2 Tues: Methodology of Macroeconomics Chapters 3 and 4 Wed: Measuring a Nation s Income and Cost of Living Chapters 5 and 6 Thurs: Production and Growth Chapter 7 Fri: Quiz and Assignment on Chapters 1-7 WEEK TWO (June 6 June 10): The Real and Monetary Economy in the Long Run Mon: Savings, Investment and the Financial System Chapter 8 Tues: The Basic Tools of Finance, Unemployment Chapters 9 and 10 Wed: The Monetary System Chapter 11 Thurs: Money Growth and Inflation Chapter 12 Fri: Quiz and Assignment on Chapters 8-12 WEEK THREE (June 13 June 17): The Open Economy and Short Run Fluctuations Mon: Open-Economy Macroeconomics Chapter 13 Tues: Macroeconomic Theory of the Open Economy Chapter 14 Wed: Aggregate Demand and Supply Chapter 15 Thurs: Aggregate Demand and Supply Analysis Chapter 15 Fri: Quiz and Assignment on Chapters 13-15 WEEK FOUR (June 20 June 24): Macroeconomic Policy in the Short and Long Run Mon: Monetary Policy and Aggregate Demand Chapter 16 Tues: Fiscal Policy and Aggregate Demand Chapter 16 Wed: Trade-off between Inflation and Unemployment Chapter 17 Thurs: Debates over Macroeconomic Policy Chapter 18 Fri: Final Examination 5 / 6
Academic Honesty Students are expected to maintain high standards of academic honesty. Specifically, unless otherwise directed by the professor, students may not consult other students, books, notes, electronic devices or any other source, on examinations. Failure to abide by this may result in a zero on the examination, or even failure in the course. 6 / 6