Principles of Macroeconomics Economics 11C Professor Woolf Fall 2009 www.uvm.edu/~awoolf General Information: Phone: 656-0190 Office: 339 Old Mill Email: [email protected] Website: http://www.uvm.edu/~awoolf/classes/fall2009/ec11/ec11.html or go to www.uvm.edu/~awoolf and follow the links Class meeting time: Monday, Wednesday, Friday 11:45-12:35 Room 301 Williams Office Hours: Monday and Wednesday 12:45 – 3:00 or by appointment. You do not need an appointment to see me during my scheduled office hours. Required Materials: 1. N. Gregory Mankiw, Brief Principles of Macroeconomics (5th ed.) 2. Aplia on line materials. The instructions for pricing of Aplia and the Mankiw text are at the end of this syllabus and are also on the class website. Aplia consists of on line practice and graded homeworks that will account for 20% of your course grade. Some questions from the Aplia assignments may appear on exams. You will receive an email reminder when they are due, generally weekly. Any Aplia quizzes that are not completed by the due date and time will not be accepted by the Aplia system or by me. I will drop the two lowest Aplia grades when I calculate your Aplia grade. About The Course: Economics 11 is a survey course in macroeconomics, the study of how the overall economy behaves. The course has three parts. The first part of the course is a general overview of what economics is all about. The second part is a survey of microeconomics, which is the study of how individual actors in the economy (consumers and firms) behave, including demand and supply analysis. Part 3 is an analysis of the macro economy, which looks at the determination of broad economic aggregates, including the level of output and income, how and why an economy grows, why growth is important, the role and importance of money and banks in the economy, the problems of unemployment and inflation, how exchange rates are determined in an interdependent world, and what appropriate macroeconomic policies are. The course has three basic goals: (1) to introduce you to the tools and concepts of economic reasoning; (2) to give you an understanding of basic economic theories; and (3) to use these theories to explain and understand the workings of our economic system. We will do that by examining four important macroeconomic variables: output, growth, unemployment, and inflation. This course syllabus can be found through my home page on the internet at http://www.uvm.edu/~awoolf. If you lose this syllabus, you can print another one from that web site. All readings other than the text are hyperlinked through the online syllabus. Economics 11 covers a great deal of material; it is like learning a new language or learning to use new tools. You should expect to at least one hour, and probably two hours, outside of class for each hour you spend in the classroom if you want to do well in this class. A word to the wise (and to those of you who want to get a good grade): read each chapter before the lecture on that chapter. A further word to the wise: If you let yourself fall behind, it will be very difficult to catch up. Each lecture and each topic in economics builds on previous concepts. By the end of the course you should be able to read and understand economics articles in The Wall Street Journal, The Economist, the business and economics pages of The New York Times, and other publications with an economic content and have an intelligent conversation about questions like: - What are the causes of economic growth? Why are some nations more developed than others? Fifty years ago, Argentina was richer than South Korea, and South Korea was about as poor as most African nations today. Why is South Korea so much richer than its neighbor North Korea, where famine kills hundreds of thousands of people and few people have electricity? (See this photo for a good illustration of the differences between North and South Korea.)2 - The U.S., Mexico, and Canada signed the North American Free Trade Agreement (NAFTA) in 1996, which lowered barriers to trade and investment between the U.S., Canada, and Mexico. Who benefits from expanded international trade? Is free trade a good policy for the U.S.? Is it good for developing countries? - Why did the U.S. economy go into a recession in 2007? How bad is the recession? How do we define and measure recessions? - What determines the level of unemployment in the nation? How much control does the government have over the unemployment rate? Should we be worried about unemployment? Why? - What is inflation? What determines the level of inflation in the nation? How much control does the government have over the rate of inflation? Why is inflation a problem? - Why is money important in an economy? What determines the value of a dollar? What role does the Federal Reserve (the Fed) play? - Why isn’t there enough gold in Fort Knox (or anywhere else) to pay off all the holders of dollar bills in gold? Should you be worried? - In 2000, the federal government had a budget surplus of $240 billion. In 2008, the federal government spent $459 billion more than it received in taxes, running a large deficit. In the current federal fiscal year, which ends September 30, the federal deficit is projected to be $1,825 billion ($1.825 trillion). What is deficit and why do we have one? What is the federal debt? Why should we be concerned about them? Ancillary Material: 1. To apply the economic concepts you are learning, I recommend reading the following - The New York Times (www.nytimes.com) including the business section, as well as other economics articles in the Times. You need to register for the Times, but it is free. - The Wall Street Journal (www.wsj.com), not free but well worth the $35 semester subscription price for the paper copy. You can read parts of the Journal online even if you are not a subscriber. If you are serious about economics, you should read the WSJ for good discussion of economic issues. 2. If you are serious about learning and truly understanding economics, read some economics blogs. By reading a couple of these blogs each day, you will get a great exposure to how economists think about the world. Some of my favorites are: Greg Mankiw’s Blog A Harvard economist (and author of your textbook) who maintains a website for his principles of economics students. You should bookmark this site or use an