Intermediate Macroeconomic Theory

Syllabus

Economics 920:103:01 and 02  Fall 2009

University of Northern Iowa Professor Kanago

Instructor Information

Instructor: Professor Kanago

Office: 206 CBB

Office Hours:  M  2:00-3:00, W 2:00-3:30, 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 study  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.  Keep these objectives in mind throughout the course 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 is  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  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 objective is to understand how the economy responds to economic shocks and policy changes.  You will consider how households and firms change their behavior in response to changes in macroeconomic variables.  For example, the expenditures of a consumer depend on 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, also work to understand general concepts, such as people respond to incentives and firms maximize profits, to build a framework for making sense of the facts.  You need to learn how conclusions are reached.  Understanding theory and graphs is more valuable than memorizing the conclusions that follow from them.

Helpful Advice

Exercise and develop professional behavior.

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

Class begins when I say, “good morning.”

If you have questions or comments address them to me not your neighbor.  Students do not want to listen to other students chat in class.

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.

If something isn’t clear, ask. 

Other students may have the same question, and your questions help me provide more informative lectures.

Chances are that I may make some errors.  Please ask me about potential mistakes during class.  It is important to me that your notes are correct.  Also, thinking about how errors 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 helpful lectures.

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

How to Do Your Best

Do all of the above.

On student assessments students write that they would have done better if they had attended class more often, read the book more often, gone to his office for help, used the study guide, done the online quizzes, and looked at his handouts.  Since students at the end of the course believe they would have done better if they had done these things, do them from the start.

In economics courses, particularly this one, the material builds on itself.  So, to find the material interesting, learn it well, and do well on the exams, it is important to attend every class and keep up by studying outside of class on a regular basis.  For example students who attend infrequently very seldom earn better than a C- and account for almost all the D’s and F’s.   I recommend you spend three to four hours studying outside of class for every hour of class.  Also, if you have difficulty understanding the material or doing the problems, 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.   It is my job to help you learn.   Also, read the “How to Do Your Best in This Course” handout.

Brief Course Outline (Exam Dates TBA)   

Topics, Chapters Covered, Dates of Exams and Quizzes

            Unit 1:  Output, Prices, and Employment

                          Chapters 1-3

             Unit 2:   Long-Run Economic Performance                                             

                            Chapters 4, 6, 7

            Unit 3:   Modeling the Economy and Policy

                           Chapters 9-11

Unit 4:  Macroeconomic Policy Issues

                          Chapters 12, 13 and 15

How Your Grade is Determined

Grades are based on four exams and a final, 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.  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 four units there are midterms worth 90 points each.  On the final there are 30 points of questions for each of the four units.  To determine your points for improvement on each one of the four units, I will multiply the points you earned on the exam 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, 78 points on the unit 3 exam and 75 points on the unit 4 exam.  On the final Jane earned 27 points on the unit 1 section, 28 points on the unit 2 section, 25 points on the unit three section and 30 points on the unit four 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. 

On the unit four section she earned 3 improvement points because 3 x 30 = 90 and 90 – 75 = 15 and 15/5 = 3.

To double-check her improvement points, Jane used a spreadsheet to make the following table.

  Unit4        75           30            90           15                3

Exams

There are five exams.  The dates will be announced in class.  The four midterms each have ten true/false questions, twenty multiple-choice questions, and a short-answer section worth 30 points.  The midterms are each worth 90 points.

The final has four sections.  For each of the previous units there is a section with three true/false questions and seven multiple-choice questions, and 10 points of short- answer questions.  The final is worth 120 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.  See the make-up policy on pages 5-6.

Quizzes
There are five quizzes, one each for units 1, 3 and 4 and two for unit 2.  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 5-6.

Homework

There is one homework you must turn in.  It is worth 10 points.  I will also 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 four midterms are each worth 90 points, the four best quizzes are worth 40 points, the homework are worth a total of 30 points, and the final is worth 120 points for a total of 550 possible points.  There are also points for improvement (see details above) and perhaps some bonus points.  The percentages are given to be informative, but it’s the number of points that matter.

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.  

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

Grades will be posted on Webct.   Let me know if you help using it.  I do not provide specifics of grades by phone or e-mail. 

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 http://www.uni.edu/policies/301.

Deadlines