Intermediate Macroeconomic Theory  

Syllabus

Economics 920:103:01   Fall 2007

University of Northern Iowa Professor Kanago

 

Instructor Information

Instructor: Professor Kanago

Office: 206 CBB

Office Hours:  M W 1:30-3:00, Th 9:00-10:30 and as available and by appointment.  E-mail questions are generally answered within 24 hours.

Phone: 273-2951 E-mail: bryce.kanago@uni.edu Website: www.cba.uni.edu/kanago/

 

Texts

 

 

Course Overview and Objectives

Course Overview

In this course you will learn about the overall behavior of the economy.  The study of macroeconomics includes the “big” issues, technological progress, economic growth and the standard of living, the ups and downs of real GDP, unemployment, and inflation.  You will examine how these variables behave, how they are related to each other, and how government policies can affect them.  This is not a course about the everyday mechanics of business management.  However, business owners and managers are well advised to understand how the economy behaves and to be informed about the consequences of government policy. 

 

Further, many of the tools and the logic used by macroeconomists to study the economy have general applications.  Someone who learns macroeconomics also learns to consider how people respond to incentives, to think about unintended consequences, to be a better abstract thinker who can focus on the key issues, and to think logically about a sequence of changes and responses.  Thinking hard about economic issues and models will improve your analytical and reasoning skills.  A basic understanding of macroeconomics and macroeconomic policy should be part of the knowledge of informed business managers, financial advisors and portfolio managers, accountants, and citizens, especially those who are interested in connections between the government and the economy.      

 

Objectives

“Alfred Marshall once said, ‘There is no person, no theorist so reckless as he who says that the facts speak for themselves.’ The facts never speak for themselves. They have to be interpreted in terms of some understanding of where they come from and what the relation between them is.”   Milton Friedman.

This course has two major objectives.  By keeping these objectives in mind throughout the course, you’ll be able to focus on the important points and retain more of what you learn.  The first objective is to get a solid understanding of basic macroeconomic  definitions, facts, and concepts.  Stories and reports on GDP, employment, productivity, and inflation are in the news all the time, but many people don’t have a very deep understanding of what these concepts mean or how to put them in perspective.  To make sense of economic news and economic theory it’s important to have a careful understanding of what economists mean when they talk about technological progress, productivity, the unemployment rate, marginal tax rates, economic growth, and investment.  During the course pay attention to how important it is to understand basic concepts like the difference between real and nominal variables.  We will look at the data to see what questions are important and to examine the adequacy of models.

 

The second course objective is to understand how the economy responds to economic shocks and policy changes.  To do this we consider how households and firms change their behavior in response to changes in macroeconomic variables.  For example, the expenditures of a consumer depend on factors such as tax rates, interest rates, wages, and government expenditures.  Similarly, we want to know how firms’ decisions to hire people or purchase capital respond to changes in other variables.  Then, for example, we can use these results to consider the responses to say a change in government expenditures and a tax to finance it, weight these responses, and determine the overall change in macroeconomic variables like real GDP, the price level, and interest rates.  

 

As you consider these objectives, you’ll realize that there are many facts and results that are important to remember.  However, you should also begin to imagine the importance of understanding general concepts, such as people respond to incentives and firms maximize profits, to building a framework for making sense of the facts.  Further you need to know how conclusions are reached.  You will find that understanding theory and graphs is more valuable than just memorizing the conclusions that follow from them.

 

How to Succeed

Make a similar commitment to this course that you would make to having a successful career or operating a successful business.  Exercise and develop professional behavior.

 

Make efforts to arrive to class on time so that you don’t miss information or disrupt class.

 

Regular attendance is associated with greater success.  Students who miss class frequently seldom earn more than a C- in the course. 

 

Class begins when I say, “good morning.”

 

If you have questions or comments address them to me not your neighbor.  Students prefer not to listen to other students chatting during class.

 

If something isn’t clear, ask.  Usually other students have the same questions, and your questions help me provide better lectures.

 

Chances are that I will make some errors.  Feel free to point them out during class.  It’s important to me that your notes are correct.  Also, thinking about errors and how they are made and how to correct them is a learning opportunity.

 

Answer my questions if you know the answer.  I ask questions to keep lectures more active, provide you another way to learn and remember the material, and to check your understanding. 

 

Participate.  Questions and answers, nodding of heads, looks of understanding or puzzlement, help me provide better lectures.

 

Unless absolutely necessary, please don’t leave class early.  If you need to leave early, please let me know before class.

 

On Mondays and Wednesdays class ends when I say “Keep on learning.”  On Fridays class ends when I say “Have a safe and educational weekend.”  I pace the lectures to end about on time.  Please don’t distract other students by starting to pack up your bags before the lecture ends.

 

In economics courses, particularly this one, the material builds on itself.  So, it’s important to keep up by studying on a regular basis.  You must study outside of class to do well in this course.

 

This course uses graphs, equations, and logic to help understand how financial markets, banks, and the economy function and interact.  If you feel uncomfortable with graphs or equations, seek help with them early in the course.

 

Study outside class to learn the material.  Measure your study success by how much you learn, not just how many hours you spend.  The more you study, the more you are likely to learn.  The more you learn, the better you are likely to do.

 

The graphs, equations, and logic, which are an important part of the course, take practice to master.  To master them you need to spend time outside of class improving your understanding by reviewing the notes, reading the text, using the study guide, doing the recommended end of the chapter problems, and taking advantage of online help.  

I recommend that you spend about two to three hours outside of class for each hour in class.  This adds up to between six to nine hours a week.

 

As you study, anticipate that questions on the exams might use different numbers or different directions of change or ask you to relate topics.

 

If you have trouble understanding the notes or the text or a problem, see me as soon as possible.  If you can’t make it to office hours, see me after class, make an appointment, or send me an email.  Since the material builds on itself, it’s a good idea to quickly remedy any lack of understanding prior to exams.  It’s my job to help you learn. 

 

Brief Course Outline and Exam Dates   

Topics, Chapters Covered, Dates of Exams and Quizzes

            Unit 1:  Output, Prices, and Employment

                          Chapters 1-3

                          Friday, September 7               Quiz #1

                          Monday, September 17        Exam #1

 

             Unit 2:   Long-Run Economic Performance                                             

                            Chapters 4, 6, 7

    Friday, September 28           Quiz #2

    Wednesday, October 10       Quiz #3

    Wednesday, October 17       Exam #2

       

            Unit 3:   Business Cycles and Macroeconomic Policy

                           Chapters 9-11

                           Monday, October 29            Quiz #4

                           Friday, November 16           Exam #3           

 

Unit 4:  Macroeconomic Policy Issues

                          Chapters 12 and 15

                          Monday, December 3          Quiz #5
                          Monday, December 10        Final Exam 1:00-2:50

           

(A more detailed calendar is attached and available on the course website.)

 

How Your Grade is Determined

Grades are based on four exams, the best four of five quizzes, points for occasional homework, points awarded for improvement on the final, and perhaps some occasional opportunities for bonus points.  Your grade is determined from a tentative preset scale based only on the number of points you earn in the class.  The only exception is that I reserve the right to mark down grades of students who seldom attend class.  Aside from some possible bonus point opportunities offered to the entire class, there are no extra-credit assignments as they tend to distract students from studying for the quizzes and exams. 

 

Points for improvement on the final are awarded as follows.  For the first three units there are midterms worth 90 points each.  On the final there are 30 points of questions for each previous unit and 80 points of questions for unit 4.  To determine your points for

improvement on each one of the first three units, I will multiply the points you earned for that unit of the final times 3, then subtract your score on the midterm.  If the difference is positive, so that you have done better on the questions from that unit on the final, your bonus for improvement on that unit will be 1/5 of the difference.  Notice that this policy may add points to your total points, but it will never take points away.  To better understand the points for improvement, consider the example below.

 

Jane Hadabadday earned 81 points on the unit 1 exam, 64 points on the unit 2 exam, and 78 points on the unit 3 exam.  On the final Jane earned 27 points on the unit 1 section, 28 points on the unit 2 section, and 25 points on the unit three section.  Her improvement points for unit 1 were zero because 3x27 = 81 and 81-81 = 0.  For unit two, she earned 4 improvement points because 3x28 = 84, 84-64 = 20, and 1/5 x 20 = 4.  On unit three she earned no improvement points because 3 x 25 = 75 and 75-78 = -3 and points are not taken away.  To double-check her improvement points, Jane used a spreadsheet to make the following table.

 

 

exam

final

3xfinal

difference

difference/5

Unit 1

81

27

81

0

0

Unit 2

64

28

84

20

4

Unit 3

78

25

75

-3

0

 

Exams

There are four exams.  The dates are given on page 2.  The three midterms each have ten true/false questions, twenty-five multiple-choice questions, and a short-answer section worth 20 points.  The midterms are each worth 90 points.

The final has four sections.  For each of the previous three units there is a section with three true/false questions and seven multiple-choice questions, and 10 points of short- answer questions.  On the last section there are ten true/false, twenty multiple-choice questions, and 20 points worth of short-answer questions. The final is worth 170 points.  Some of the exams may have bonus questions.  Turning in quizzes or exams late carries penalties ranging from a reduction in points to a zero on the work.

 

Quizzes
There are five quizzes, one each for units 1, 3 and 4 and two for unit 2.  Dates of the quizzes are listed on page 2 and on the schedule.  Each quiz has five multiple-choice questions and is worth ten points.  Turning in quizzes or exams late carries penalties ranging from a reduction in points to a zero on the work.  See the make-up policy on pages 3-4.

 

Homework

I will give short homework problems worth 5 points each.  You may accumulate up to 20 points on these over the course of the semester.  However, you can turn in as many as you want to get practice and feedback.

 

Scale

From experience I have a pretty good idea what sort of scale gives a reasonable class GPA and is a bit more generous than a standard normal curve.  The tentative grading scale is given below.  The three midterms are each worth 90 points, the four best quizzes are worth 40 points, the homework are worth a total of 20 points, and the final is worth 170 points for a total of 500 possible points.  There are also points for improvement and perhaps some bonus points.  The percentages are given to be informative, but it’s the number of points that matter.

 

A

92%

460

A-

90%

450

B+

87%

435

B

82%

410

B-

80%

400

C+

77%

385

C

72%

360

C-

70%

350

D+

67%

335

D

60%

300

 

 

Polices

Exam Design

The exams are written by me and based on the notes, the text, and current events.  Each exam will have one or two questions on current events.  So, keep up with the current events posted on my website.  Some questions may be based on end-of-the-chapter problems or questions from the study guide or online resources.  Questions will be divided about equally between chapters, with some emphasis given to chapters that more class time is devoted to.  Questions may cover basic facts and definitions; graphs, equations, and logic; and applications requiring you to use different numbers and different changes in directions than those provided in examples you have seen in class.   For more information on questions and studying for the exam see the handouts “Think!” and “Studying for the Exams.”

  

Make-Up Examinations

If you are ill or have a valid excuse, you may take a make- up examination.  Except in unusual circumstances, you must notify me at least 48 hours in advance that you need to take a make-up for a reason other than illness, and within 24 hours after or as soon as possible otherwise for illness or injury.  Make-up exams are designed to be of similar difficulty to the regular exam, but will be all short-answer questions.  Depending on the circumstances and how many students need to take a make-up, the make-up may be administered before or after the regular exam.  Make-up exams are not offered for your convenience.  They are designed for people who are unable to be present on the day of the exam.

You must take the final exam at the scheduled time unless you have a university approved absence or excessive examination load (three finals on the same day – which you should try to avoid when you schedule your classes).  However, as room allows I will permit you to take the final with the other section.

  

Grade Appeals
You have the right to make an appeal to me concerning the grading of your answers.  However, all appeals must be in writing and explain what the grounds for your appeal are.  “I need a higher grade because....” will never work as an appeal.  Appeals must be made within three weeks from the time that the work was handed back.

 

Getting Grades

I don’t usually post grades.  Except in unusual circumstances I do not provide specifics of grades by phone or e-mail.  I do attempt to hand back exams as soon as possible.

 

CBA and University Policy

ADA Policy
The Americans with Disabilities Act of 1990 (ADA) provides protection from discrimination for qualified individuals with disabilities.  Students requesting instructional accommodations due to disabilities must arrange for such accommodation through the Office of Disability Services.  The ODS is located in room 103 (upper level) Student Health Center.  The phone number is (319) 273-2676.

Students who have special needs of any sort are encouraged to make me aware of them and to discuss any arrangements that may be necessary or helpful.  For example, you should let me know if you need to sit near the front of the classroom for any reason.  However, I often cannot do anything unless you have first contacted the Office of Disability Services and followed their procedures.

CBA Course Repeat Policy
Students enrolled in a CBA course at the beginning of the second week of the fall semester will not be allowed to register again for the same course until the end of advance registration for the spring semester.  Students who wish to re-register for a course may place their name on a waiting list.  Registration accommodation will depend on course openings after the completion of spring advance registration.  Summer session is excluded from this policy.


Academic Dishonesty Policy
Academic dishonesty includes all dishonorable academic behavior.  This includes, but is not limited to claiming the work of others as one’s own.  Students should be clear on what, if any, cooperation with other students is permissible on an assignment before working together.  University policy concerning cheating allows faculty to assign an F in the course and send a letter concerning the incident to be kept on file by the Vice President of Academic Affairs.  Details of University Policy may be found online at www.uni.edu/pres/policies/301.shtml.


Deadlines

The consequences of dropping a course differ depending on when you drop.  It is your responsibility to be aware of these deadlines and you should expect that I will not make exceptions to them.  Academic deadlines are available at: 
http://www.uni.edu/regist/calendars/fall2007alendar.shtml