Learning Outcomes Assessment Economics 330 Instructor: James C. McBrearty Academic year 2012-13 Overview Within the context of the Department of Economics learning objectives, the purpose of Economics 330 is to take an in-depth look at macroeconomic institutions and policies. It was designed to replace an old Money and Banking course and its original mandate from the Department and College was to cover not only commercial banking and the Federal Reserve System but also to provide an overview of GDP itself, the business cycle, unemployment, inflation, fiscal policy, the banking sector, monetary policy, and international trade and finance. Global trends were to be integrated throughout the foregoing topics as much as possible. The Eller College s allocation of learning goals across all of its departmental majors expects students who have taken Economics 330 to demonstrate an awareness of global trends and the impact on businesses. Partly reflecting this special role within the Eller program, the Economics Department assesses students in Economics 330 on only two of the learning subgoals for its undergraduate core courses: Business Knowledge Explain the relationships among business, government, and markets. Explain the determinants of international trade and the workings of international markets. International comparisons are employed in the topics of GDP, unemployment, inflation, and fiscal policies. Also covered are comparative advantage and the outsourcing and insourcing of jobs, and the balance of payments and how the deficits of the government and the balance of payments are related. The course is taught in a large lecture format of 300+ students every semester. To demonstrate understanding of the material, students complete the following: twelve homework assignments of between fifteen and twenty multiple-choice and short-answer questions geared to the topics listed on the syllabus, all completed online (25% of grade); three midterm exams each consisting of fifty multiplechoice questions, usually with five answers (75% of grade); and three pop quizzes of between sixteen and twenty multiple-choice questions, usually administered approximately one week before the midterm exams (worth up to 30 bonus points). Summary of assessments for 2012-13 Reflecting the internal goals of Economics 330 and the overall educational priorities of the Economics Department, the instructor has assessed student learning outcomes not only in Business Knowledge but also Critical Thinking and Social Responsibility. The latter results are reported here, though they are not included in the overall departmental assessment of Critical Thinking and Social Responsibility.
Critical Thinking: 3.1 (on the four point scale) Business Knowledge: 3.7 Social Responsibility: 3.1 The Critical Thinking score is based on student performance on twenty exam questions. From among those twenty questions, the Business Knowledge score is based on a subset of ten questions, and the Social Responsibility score is based on a mostly different subset of ten questions. The assessment questions were somewhat different in 2011-12, and so to allow reasonable comparisons between the two years the question pool was restricted to eight of the twenty questions, for which identical or very similar questions were asked in both years. Four of those eight questions assess Business Knowledge (as well as Critical Thinking) and three assess Social Responsibility. Consideration of this smaller pool of questions produces the following assessments: 2012-13 2011-12 Critical Thinking: 3.9 2.6 Business Knowledge: 4.0 3.3 Social Responsibility: 4.0 4.0 Only the 3.5 score on Business Knowledge, in the first table, is incorporated into the department-wide assessment of learning outcomes in 2012-13. Evaluation Process The assessment scores are based on student performance on twenty multiple choice questions spread across the three midterm examinations. In 2011-12, the course was taught only in the Spring and the assessment score is based on performance during that semester; in 2012-13, the course was taught in both semesters and the assessment score is based either on average performance across both semesters (for nine of the twenty questions) or on performance only in the Fall semester (for the remaining eleven questions that had no analogs on the Spring semester examinations). Average performance on the questions is converted to an assessment score using the department s standard rubric: Share of students who answer the question correctly Assessment score 85% 4.0 Exceeds expectations 70% 3.0 Meets expectations 55% 2.0 Partial achievement 40% 1.0 Does not meet the goal All of the exam questions used in the assessment are listed in the final section of this report. Questions are grouped by learning goal(s), and questions that were considered similar across semesters are reported together. All of the assessment scores reported in the previous section are computed from the data in the final section.
Instructor s comments Students still have difficulty even at the Junior/Senior level with analytical questions having answers indicating more than one ramification, and often with calculations, even though I permit the use of a fourfunction calculator. I think they might be relying too heavily on the PowerPoint presentations which are posted on Blackboard. To address these issues I instituted twelve homework assignments to be completed within forty-eight hours of the day they are assigned (usually covering one, but sometimes two, chapters), which are listed on the syllabus. These assignments constitute 25% of the course grade. Additionally, I am devoting more class time to critical thinking and problem solving not necessarily shown on the publisher s PowerPoint slides. Also, I am hoping the pop quizzes will entice students to stay current with the course material and help prime them for the midterm examinations. Assessment Questions Critical Thinking/Computational Skills Spring 2013 (Question 17 on midterm 1) Suppose you are given the following information about some hypothetical economy and its national income accounts. Use this information to answer the questions that follow. (Amounts are in billions of dollars.) Indirect business taxes 156 Net U.S. income earned abroad 8 Corporate profits 101 Corporate income taxes 56 Retained earnings 24 Proprietors income 73 Rents and interest earned (R +I) 98 Exports 18 Imports 10 Net domestic product 1,436 Government expenditures on goods 323 and services Transfer payments 230 Social Security contributions 120
Consumption expenditures 1,055 Gross private domestic investment 220 spending Disposable personal income 1,123 Find GDP. a. $1,616 b. $1,606 c. $1,598 d. $1,255 e. $1,836 Fall 2012 (Question 15 on midterm 1) Using the table below, calculate GDP. Wages & salaries $2000 Government purchases of goods & services $500 Exports $800 Rental income $300 Consumption spending $3000 Transfer payments $300 Private investment spending (Gross) $600 Profit $1200 Imports $600 Interest income $800 Purchases of corporate stock $500 Based on the above information, GDP in this year was: a. $4,100 b. $4,300 c. $4,400 d. $4,600 e. $4,900 Spring 2013 95% Fall 2012 87% Spring 2012 61% (similar question)
Spring 2013 (Question 49 on midterm 1) If real disposable income rises by $100 and consumption rises by $75, then the: a. APC = 0.75 b. MPC = 0.25 c. APS = 0.75 d. MPS = 0.25 e. none of the above Fall 2012 (Question 49 on midterm 1) When the MPC = 0.9, the multiplier is. a. 9 b. 0.1 c. 11.1 d. 10 e. 1 Spring 2013 71% Fall 2012 90% Spring 2012 87% (similar question) Spring 2013 (Question 32 on midterm 2) Maria has an income of $30,000 and pays $4,500 in income taxes. When Maria s income rises to $40,000, her tax bill rises to $6,500. What is Maria s marginal tax rate? a. 16.25% b. 20% c. 10% d. 15% e. 25% Spring 2013 98% Fall 2012 93%
Fall 2012 (Question 23 on midterm 1 ) If the MPC is 0.75, an $80 billion increase in planned investment spending would cause equilibrium output to increase by: a. $60 billion b. $140 billion c. $320 billion d. $400 billion e. $106.7 billion Spring 2012 (Question 32 on midterm 1) Tessa's break-even income is $10,000 and her MPC is 0.75. If her actual disposable income is $16,000, her level of: a. consumption spending will be $14,500. b. consumption spending will be $15,500. c. consumption spending will be $13,000. d. saving will be $2,500. Fall 2012 62% Spring 2012 57% Critical Thinking/Social Responsibility Fall 2012 (Question 6 on midterm 2 ) One major advantage of built-in stabilizers when compared to discretionary fiscal policy is that: a. Built in stabilizers can pull an economy out of a deep recession, while discretionary fiscal policy cannot b. The lags associated with built-in stabilizers are usually shorter than those associated with discretionary policy c. The multiplier effect associated with built-in stabilizers is larger than that associated with discretionary policy d. The multiplier effect associated with built-in stabilizers is smaller than that associated with discretionary policy e. Built-in stabilizers have no impact on the federal budget, while discretionary fiscal policy does have an impact Fall 2012 97% Spring 2012 96%
Spring 2013 (Question 31 on midterm 1) Say s law: a. was developed by J.M. Keynes. b. maintains that demand creates its own supply. c. maintains that supply creates its own demand. d. implies that general overproduction is likely under capitalism. e. sets forth the idea of creative destruction. Fall 2012 (Question 40 on midterm 1) Say s law is the idea that: a. In the long run and even many times in the short run, the economy reaches full employment automatically b. The aggregate production function, along with the labor market, determines the economy s level of output c. Total output will always exceed total spending, so saving must be positive d. Whenever a good or service is produced, an equal amount of income is created to enable that good or service to be purchased e. Markets always clear, so there are no disruptions in the economy Spring 2013 90% Fall 2012 80% Fall 2012 (Question 19 on midterm 1) Providing training to both employed and unemployed individuals will help to alleviate: a. Frictional unemployment b. Seasonal unemployment c. Structural unemployment d. Cyclical unemployment e. Short-term unemployment Fall 2012 91%
Spring 2013 (Question 47 on midterm 2) Most of the public portion of the U.S. national debt is owed to. Thus a rising national debt implies that there will be a future redistribution of income and wealth in favor of. a. foreigners; foreigners b. U.S. institutions and higher-income citizens; such institutions and citizens c. foreigners; those most needing government services d. middle-income U.S. citizens; those most needing government services e. federal government agencies and the Federal Reserve system; U.S. banks and other financial institutions Fall 2012 (Question 47 on midterm 2) Which one of the following can correctly help to explain why higher U.S. government budget deficits that boost the U.S. public debt might prove burdensome to future U.S. taxpayers? a. Foreign holders of the U.S. public debt will receive transfers from future U.S. taxpayers b. Future U.S. taxpayers will receive transfers from foreign holders of the U.S. public debt c. A portion of deficit spending by the federal government is on capital goods. d. The only way to reduce federal budget deficits and the public debt is to substantially raise future income tax rates to the levels of pre-1981 e. none of the above Spring 2013 12% Fall 2012 40% Fall 2012 (Question 47 on midterm 1) A recessionary gap is: a. The amount by which the equilibrium output falls short of the full employment output b. The amount by which the equilibrium output exceeds of the full employment output c. The amount by which total spending falls short of what is needed to achieve full employment d. The difference between the existing unemployment rate and the full employment target of 5.5% unemployment e. The amount of additional tax revenue that the government needs to balance its budget during a recession Fall 2012 25%
Spring 2013 (Question 7 on midterm 2) Suppose an increase in government spending stimulates real GDP without affecting the price level. What is the relevant range of the aggregate supply curve in this case? a. the classical range b. the intermediate range c. the Keynesian range d. the monetarist range Fall 2012 (Question 9 on midterm 2) Suppose the economy is on the intermediate range of the aggregate supply (AS) curve. Which of the following would both reduce real GDP and increase the price level? a. A decrease in aggregate supply b. An increase in aggregate demand c. A decrease in aggregate demand d. An increase in aggregate supply e. None of the above Spring 2013 80% Fall 2012 82% Critical Thinking/Computational Skills/Business Knowledge Spring 2013 (Question 11 on midterm 3) If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed from the non-bank public will result in total deposit creation throughout the banking system of: a. $9 million. b. $90 million. c. $10 million. d. $900,000. e. $1 million.
Fall 2012 (Question 12 on midterm 3) Assume a bank faces a required reserve ratio of 5 percent. If a bank has $200 million of checkable deposits and $15 million of total reserves, then how large are the bank s excess reserves? a. $0 b. $5 million c. $10 million d. $15 million e. $200 million Spring 2013 38% Fall 2012 96% Spring 2012 51% (similar question) Critical Thinking/Business Knowledge Fall 2012 (Question 5 on midterm 2) An increase in government spending will have a greater impact on equilibrium output than a tax reduction of the same size because: a. A government spends its money more efficiently than private households b. Government spending tends to stimulate investment spending by businesses, whereas consumption spending by households has no impact on investment spending c. Crowding out reduces the stimulus of the tax reduction but does not apply to government spending d. Increases in government spending are subject to a multiplier effect, but tax reductions are not e. Part of the tax reduction will be saved Fall 2012 64%
Fall 2012 (Question 4 on Midterm 2) When the Federal Reserve decreases the reserve requirement, a. The lending ability of banks contracts b. Required reserves are converted into excess reserves c. It becomes more difficult for banks to borrow from the Fed d. The simple deposit multiplier will increase e. Both b. and d. Fall 2012 96% Spring 2012 77% Fall 2012 (Question 12 on midterm 2) Assume Congress enacts a $20 billion decrease in spending and a $20 billion decrease in taxes. The result of this balanced budget approach is a: a. $10 billion decrease in aggregate demand b. $20 billion increase in aggregate demand c. $40 billion decrease in aggregate demand d. $20 billion decrease in aggregate demand e. No change in aggregate demand; the decrease in spending cancels out the decrease in taxes Fall 2012 77% Fall 2012 (Question 44 on midterm 2) Which one of the following should be included in the gross public debt? a. U.S. Treasury securities purchased by an office of the federal government s Department of Housing and Urban Development b. U.S. Treasury securities purchased by a federal government agency called the Government National Mortgage Association c. U.S. Treasury securities purchased by the parents of a college student d. U.S. Treasury securities purchased by the Social Security Administration e. All of the above Fall 2012 81%
Fall 2012 (Question 3 on midterm 3) Calculate the realistic money multiplier if the reserve requirement is 0.10, the currency-deposit ratio is 0.5, and the excess reserve ratio is 0.0001. a. 2.5 b. 2.44 c. 2.3 d. 2.06 e. 5 Fall 2012 89% Critical Thinking/Business Knowledge/Social Responsibility Spring 2013 (Question 40 on midterm 3) If the dollar-peso exchange rate (dollar price of the peso) fell, a. more Americans would travel to Mexico. b. the demand for pesos would fall. c. few firms would want to relocate to Mexico. d. Americans would buy fewer Mexican goods. e. the demand for pesos curve would shift inward to the left. Fall 2012 (Question 43 on midterm 3) If the exchange rate of Japanese yen for U.S. dollars decreases from 100 yen = $1 to 80 yen = $1, then: a. Japanese produced goods would become more expensive for American consumers b. The dollar has appreciated c. The yen has depreciated d. U.S.-produced goods would become more expensive for Japanese consumers e. U.S. imports from Japan would increase Spring 2013 77% Fall 2012 86% Spring 2012 88% (same question as Fall 2012)
Fall 2012 (Question 46 on midterm 3) Suppose a teakwood carving from a small island nation in the South Pacific costs 4 yaps. If the exchange rate between this island nation & the U.S. increases from $1 per yap to $2 per yap: a. The quantity demanded of teakwood carvings by Americans increases b. The quantity demanded of teakwood carvings by Americans decreases c. The yap has depreciated in value d. The U.S. dollar has appreciated in value e. Nothing happens Fall 2012 90% Spring 2013 (Question 31 on midterm 3) If producing a ton of fish takes 300 units of resources in England, but 600 units of resources in Norway, while producing a ton of oil, takes 100 and 300 units of resources, respectively, a. England has a comparative advantage in producing fish and Norway has a comparative advantage in producing oil b. England s opportunity cost is 1/3 ton of fish for 2 tons of oil c. Norway s opportunity cost is 2 tons of fish for 3 tons of oil d. the exchange ratio for mutually beneficial international trade must lie between one 1 ton of fish on the one hand and 4 tons of oil on the other hand e. Norway has a comparative advantage in producing fish and England has a comparative advantage in producing oil. Spring 2013 49% Fall 2012 33%
Critical Thinking/Graphing Analysis/Business Knowledge/Social Responsibility Fall 2012 (Question 26 on midterm 3) If sugar imports were not restricted in any way in the figure above, the nation s volume of sugar imports would be: a. 0D b. 0A c. BF d. AG e. CE Fall 2012 93% Spring 2012 81%