Principles of Macroeconomics Economics 11C

Principles of Macroeconomics Economics 11C
Professor Woolf
Fall 2015
General Information:
Phone:
656-0190
Office:
339 Old Mill
Email:
[email protected]
Class meeting time: Monday, Wednesday, Friday 3:30 – 4:20 Fleming 101
Office Hours:
MWF 1:00-2:00 or by appointment. You do not need an
appointment to see me during my scheduled office hours.
Teaching Assistant:
Office and hours:
Email:
Justin Dunn
to be determined
[email protected]
Required Materials:
1. Timothy Taylor, Principles of Macroeconomics (OpenStax College, 2014)
There are a number of ordering options for this book, ranking from free to a hard copy. You
can find a link to ordering options here: http://bit.ly/1foXWwT
2. Sapling Learning Center homeworks. This is an online practice and
homework software. Purchase of a license that gives you access to Sapling is at
http://bit.ly/saplinginstructions
3. An i-clicker. Available at the UVM Store or you can purchase a used one. If you
have one from a previous class or need one for another class you can use the same iclicker for all classes at UVM.
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, which begins after the
first exam, 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, 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 data and
theories; and (3) to use the data and theories to explain and understand the workings of
our economic system. We will do that by looking at the microeconomic foundations of
the economy and four important macroeconomic variables: output, economic growth,
unemployment, and inflation.
The course syllabus can be found on Blackboard. Readings and podcasts are hyperlinked
on the syllabus and some are on Blackboard.
The course syllabus has hyperlinked readings, videos, and podcasts and can be found on
the class Blackboard site. To get to Blackboard, go to bb.uvm.edu, login, and click on
this class. If you have questions or problems with Blackboard, go to help.uvm.edu and
follow the appropriate links or call the UVM tech support helpline at 656-2604.
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: read each chapter before the lecture on that chapter. 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 such as:
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Last year, a barrel of crude oil cost more than $100. Today it costs $40. Why
has this happened? When will the earth run out of oil?
What happened in Greece this summer?
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?
What determines the price of apples, both the Granny Smith and iPhone type?
How many American workers earn the minimum wage? Should the government
raise the minimum wage to $15? Or to $50? What are the likely consequences
of raising the minimum wage?
Why did the U.S. economy go into a recession in 2008? What caused the
financial crisis and the ensuing recession? What is a recession?
What determines the level of unemployment? How much control does the
government have over the unemployment rate? Should we be worried about
unemployment?
What is inflation? Should you be worried about it?
What is money? Why is it important in an economy?
How do banks work, and why are they important?
What is the Federal Reserve System? How do its policies affect the economy?
In 2000, the federal government collected $240 billion more in tax revenues than
it spent. In 2009 the government spending was $1.4 trillion more than tax
revenues. Why should you be concerned about the federal budget and its
surpluses and deficits?
The federal government owes more than $18 trillion to people and institutions
that have lent it money. What is the federal debt and how large is it really?
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Economics has been called the “dismal science.” If these kinds of questions are
interesting to you, then you won’t find economics dismal. (And if you are interested in
why economics is called the dismal science, read this.)
Class Policies:
Come to class on time and do not leave before class is over.
Do not use cell phones during class.
Do not open up laptops during class. Take notes by hand. Research shows you learn more
taking notes that way than by typing on a laptop. If you have a medical or some other
reason for using a laptop during class see me.
Bring your i-clickers to class every day and only respond to questions with your own
clicker. Be aware that using another student’s clicker constitutes cheating.
Familiarize yourself with all UVM policies, including the code of academic integrity, at
<https://www.uvm.edu/policies/?Page=cats.php&cat=St&SM=cat_menu.php>
Ancillary Material:
1. To apply the economic concepts you are learning, I recommend either of the following:
a. The New York Times (nytimes.com) including the business section, as well as other
economics articles in the Times. Student subscriptions are about $15 for the semester at
<http://www.nytimes.com/subscriptions/edu/lp3K6JY.html?campaignId=4RXH8>.
b. The Wall Street Journal (wsj.com) available at a student subscription price of $15 for
the semester at< wsj.com/studentoffer >.
2. If you want to truly understanding economics, read some economics blogs. I guarantee
you that if you read 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:
Marginal Revolution One of the most popular economics blogs, and not just about
economics.
Planet Money Not really a blog, but National Public Radio reports about economic issues
from the Planet Money team. Several of their podcasts are on the syllabus.
Conversable Economist Timothy Taylor, author of your text, has a very readable almostdaily post on some interesting economic topic.
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Exams and Grading:
You will be evaluated on two midterm (MT) exams, a cumulative final exam, Sapling and
other homework assignments and in-class i-clicker quizzes and assignments. Some
homework questions will be assigned after we discuss a topic and others before the topic is
discussed in class, but will be based on readings you will do before the class period. I will
alert you via email when homework assignments are due, so be sure to regularly check your
UVM email account. I do not accept late homework assignments. In-class quizzes and iclicker assignments cannot be made up. I will drop your two lowest i-clicker assignment
grades so if you have to be away from class for any reason you will not be penalized for two
absences. Course components will be weighted as follows:
Course Component
Sapling exercises, homeworks,
i-clicker in-class quizzes
Midterm 1
Midterm 2
Final
Total
Weighting 1
Weighting 2
Weighting 3
(MT1 is lowest
score)
15%
10%
15%
25%
35%
100%
(MT2 is
lowest score)
15%
10%
25%
15%
35%
100%
(Final is lowest
score)
15%
10%
25%
25%
25%
100%
I will calculate your final course grade using each of the three weighting schemes. Your
final grade will be determined by the highest score.
Course Schedule:
The following is a timetable for the course. I will try to stick to the schedule but it may
change. I expect you to do the assigned readings before the class period. If you do, you
will better understand the material we cover in class and you will do better on the exams.
Assignments listed as TT refer to the Timothy Taylor text. Other readings are either
hyperlinked or on the class Blackboard site. Note that most Planet Money podcasts are
about 20 minutes long. Some have transcripts as well as the podcast.
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Date
Aug 31, Sept
2
Topic
Introduction, the Economic
Way of Thinking, and Basic
Economic Principles
Sept 4, 7
Sept 9, 11
Sept
14,16,18
No Class
Simple Economic Models:
Choice and the Production
Possibility Curve
Comparative Advantage and
Trade
Sept 21- 30
Demand and Supply
Oct 2
Oct 5, 7, 9
Midterm 1
GDP: Measurement and
Definition
Oct 12, 14
Wealth and Poverty: The
Importance of Economic
Growth
Oct 16, 19
Jobs and Unemployment
Oct 21, 23,
26
Inflation and the Price Level
Readings
TT Ch 1
TT Appendix A: The Use of Mathematics in Economics
Leonard Reed, I Pencil
Sassa Issenberg, The Sushi Economy (The American, July/August 2007)
Recommended:
Bruce Gottlieb, Why Don't Buses Have Seat Belts?, Slate
Steven Levitt (video), The Freakonomics of Crack Dealing, TED talk
TT Ch 2
TT Ch 20
Frédéric Bastiat, A Petition (1845)
Paul Krugman, In Praise of Cheap Labor, Slate (March 20, 1997)
Recommended:
Don Boudreaux, Comparative Advantage and the Tragedy of Tasmania
(Everyday Economics)
TT Ch 3,4
Alan Krueger, Seven Lessons About Super Bowl Ticket Prices, New
York Times (Feb 1, 2001)
A Teenager’s Guide to Doing Business in North Korea, Planet Money
podcast
Timothy Taylor, Characteristics of U.S. Minimum Wage Workers, The
Conversable Economist, August 13, 2014
Recommended:
Russell Roberts, Ticket Prices and Scalping (podcast)
Khan Academy: Supply, Demand and Market Equilibrium
TT Ch 6
Why GDP Matters for Schoolkids (Planet Money podcast)
Josh Zumbrun, Sex, Drugs, and GDP: The Challenge of Measuring the
Shadow Economy, (Wall Street Journal)
Bill Davidow, The Invisible Economy (The Atlantic)
Recommended:
Khan Academy: GDP: Measuring National Income
TT Ch 7
Alex Tabarrok, Basic Facts of Growth and Development and The
Importance of Institutions, (MRUniversity video)
Hans Rosling, Debunking Third World Myths (TED video, 1/14/07)
Would You Rather be Rich in 1900 or Middle Class Now? (Planet Money
podcast)
The Secret Document that Transformed China (Planet Money podcast)
TT Ch 8
U.S. Bureau of Labor Statistics, How the Government Measures
Unemployment (2014)
Adam Davidson, Making it in America, The Atlantic, January 2012
Keeping the Biggest Secret in the U.S. Economy (Planet Money podcast)
Young, European, and Broke, (WSJ, Aug 9, 2014) (this article is in
Blackboard under Course Materials)
TT Ch 9
Uncle Sam’s Eyes in the Aisles (Washington Post Aug 29, 2006)
Megan McArdle, Printing Money Goes Haywire in Venezuela,
Bloomberg View, August 28, 2015
Recommended:
5
Oct 28, 30
Nov 2
Nov 4,6,9
International Trade and
Globalization
Midterm 2
Money and Banks and the
Financial Crisis
Nov 11, 13,
16
The Federal Reserve
Nov 18, 20
(and 30)
Macro Theories and Models
Thanksgiving
Break
Nov 23-27
Dec 2, 4
The Federal Budget and Fiscal
Policy
Dec 7,9
Borrowing and the National
Debt
Dec 14
Final Exam 10:30 am
Khan Academy: Inflation—Measuring the Cost of Living
TT Ch 10
Hal Varian, An Ipod has Global Value, New York Times (June 28, 2007)
TT Ch 14
The Birth of the Dollar Bill (Planet Money podcast)
Michael Phillips, In Some Places U.S. Currency Isn’t Sound as the Dollar,
(Wall Street Journal, Nov 2, 2006)
Giant Pool of Money (This American Life, May 2008)
Recommended:
Khan Academy: The Monetary System
TT Ch 15 to p.357 The Birth of the Dollar Bill (Planet Money podcast)
Michael Phillips, In Some Places U.S. Currency Isn’t Sound as the Dollar,
(Wall Street Journal, Nov 2, 2006)
Recommended:
Khan Academy: The Monetary System
TT Ch 11, 12, 13, Ch 15 Section 15.4, 15.5
Recommended:
Khan Academy: Aggregate Demand and Aggregate Supply
Keynesian Economics
TT Ch 17
Gregory Mankiw, Fair Taxes? Depends on What You Mean by Fair (NY
Times, July 15, 2007)
The Surprisingly Entertaining History of the Income Tax (Planet Money
podcast)
TT Ch 18
John Steele Gordon, A Short History of the National Debt (Wall Street
Journal, 2/18/09)
What If We Paid Off the Debt? (Planet Money podcast)
Analysis of the CBO’s Updated Budget and Economic Analysis,
Committee for a Responsible Federal Budget (2015) pp 1-25.
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If you are interested in exploring economics in more depth, but not in a technical way, here
are some interesting and readable books about economics:
Hernando de Soto: The Mystery of Capital A Peruvian economist explains why poor
institutions help explain world poverty
Tim Harford: The Undercover Economist: Exposing Why the Rich are Rich, the Poor are
Poor—and Why You can Never Buy a Decent Used Car
You’ll learn why
Starbucks locates stores where they do
Steven Landsburg, The Armchair Economist: Economics and Everyday Life The title says
it all
Steven Levitt and Stephen Dubner, Freakonomics and SuperFreakonomics An economist
and journalist write about how economics and data can be used in a clever way to
explain why teachers and sumo wrestlers cheat, and a lot of other things
Russell Roberts, The Choice: A Fable of Free Trade and Protectionism A novel about
free trade
Russell Roberts, The Price of Everything: A Parable of Possibility and Prosperity A novel
about economic theory
P.J. O’Rourke, Eat the Rich: A Treatise on Economics Very funny look at the wealth of
(some) nations
PBS: The Commanding Heights at
http://www.pbs.org/wgbh/commandingheights/lo/story/index.html A great PBS
video series, made in 2002, interweaves the economic and intellectual history of the
twentieth century, focusing on the great conflict over using governments or markets
to guide the economy
Matt Ridley, The Rational Optimist: How Prosperity Evolves Why are we so pessimistic
about the economic and environmental future when we are so much better off than
we were in the past?
Pietra Rivoli, The Travels of a T-Shirt in the Global Economy: An Economist Examines the
Markets, Power, and Politics of the Global Economy An exploration of how your
T-shirt went from being cotton grown in a Texas field to the shirt in your drawer, and
how it eventually ends up in Africa
James Surowiecki, The Wisdom of Crowds: Why the Many are Smarter than the Few and
How Collective Wisdom Shapes Business, Economies, Societies, and Nations How
the decentralized decision making of markets leads to optimal outcomes. Includes
stories about how Wall Street investors figured out which part caused the space
shuttle Challenger to explode seconds after if blasted off within minutes of the
accident and how a bunch of country peasants know exactly how much a cow weighs
Charles Wheelan, Naked Economics: Undressing the Dismal Science A nice non-technical
and easy to read introduction to economics. Definitely not a textbook.
Last updated August 28, 2015
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