Chapter 1: Welcome to Economics

What is the difference between macro and micro economics?
The central choices of economic decision making: what, how and for
Whom to produce?
The participants in the market economy
Key concepts used in economic analysis:
Scarcity, choice, tradeoff, opportunity cost
Marginal analysis and choice
Ceteris Paribus or “everything else held constant”
Positive and normative economics and using theories and models to measure economic events; Criteria for evaluation of economic policy and policy proposals
Economic systems – the market economy, mixed economy, and command economies
Review of expressing relationships between economic variables using graphs
 
Review of graphing and its use in economics
Reading assignment to be completed by next week: chapters 1 and 3
 

Chapter 3: Demand and Supply

Product and Resource Markets – Role of households (consumers) and firms
What is a market?
Consumer demand and the “Law of Demand”
Law of Demand: the inverse relationship between price and quantity demanded
Change in quantity demanded vs. change in demand: applying the concept of “ceteris paribus”
Causes of a shift in demand: changes in income, prices of related goods, expectations, number of consumers, tastes and preferences; Normal and inferior goods
Law of Supply: The positive relationship between price and quantity supplied
Change in quantity supplied vs. change in supply
Causes of a change in supply: changes in cost of resources, prices of related goods, technology, expectations of producers, numbers of producers
Applications (examples) of Demand and Supply graphs; Market demand, market supply and market equilibrium
Government price controls: price ceilings, price floors (shortages and surpluses)
 
Reading assignment for next class: Chapter 6 

Chapter 6: The Macroeconomic Perspective

Review for quiz 1: chapters 1 & 3 (30-33 multiple choice questions)
             
Government sector: federal, state, and local government in the economy
The financial sector; the international sector
The three markets: goods and services, labor market, money market
Nominal GDP, real GDP, and Potential GDP; the difference between GNP and GDP
Expenditure Approach to measure GDP: consumption by households, business spending, government spending, and spending by the rest of the world (Net exports)
Income Approach to measure GDP: Income from labor, rent, interest, proprietor’s income, profit
Two adjustments to the income approach measure of GDP (depreciation and taxes)

Reading assignment for next week: Chapter 8: Unemployment

Chapter 8: Unemployment

How is the labor force defined? Who is in the labor force?
Measuring employment and unemployment
Who is not counted in the Government’s official count of the unemployed?
Types of unemployment; Real GDP and unemployment over the business cycle
The difference between the ‘household survey’ (the civilian labor force) and the ‘establishment survey’ (number of payroll jobs added by employers)
The labor force participation rate
Unemployment, ‘natural’ unemployment rate, and full employment
 
Reading assignment: Chapter 9: Inflation
 

Chapter 9: Inflation

                                     
 Measuring changes in Cost of Living: The Consumer Price Index;
Inflation/Deflation;
Why inflation and deflation are problems?
Correcting economic variables such as GDP for the effects of inflation
Real and nominal income; Real and Nominal Interest Rates
Costs and causes of inflation
What is hyperinflation?
The Consumer Price Index; Constructing the CPI; Measuring Inflation Rate
The main sources of bias in the CPI

Review for Midterm: Chapters 1,  3, 6, 8, and 9

MIDTERM

Reading assignment: Chapter 11 – Aggregate Demand/Aggregate Supply Model

Chapter 11: Aggregate Demand/Aggregate Supply Model

Aggregate supply: Long-run aggregate supply, short-run
aggregate supply, fluctuations in aggregate supply
Aggregate demand: Components of aggregate demand,
fluctuations in aggregate demand
Shifts in the AD and AS curves: What do they show?
The roots of macroeconomics: John Maynard Keynes and the Great Depression
Classical vs. Keynesian economics; the short-run vs. long-run model of macroeconomic equilibrium
The Keynesian model: challenge to Say’s Law: the Demand Driven Economy
Wage and Price inflexibility; The Role of Government
Concerns of inflation (boom times) and deflation (severe economic downturns)
Are all recessions the same? Comparisons of the recent “Great Recession” to the “Great Depression”
The Business Cycle in the AS-AD Model: recessionary gap, inflationary gap
 
Reading assignment: Chapter 12: The Keynesian Perspective
Chapter 13: The Neoclassical Perspective
 

Chapter 12: The Keynesian Perspective

Chapter 13: The Neoclassical Perspective

Review for quiz #2: 30-33 multiple choice questions (chapters 11, 12&13)
The Business Cycle; short-term vs. long-term growth trend; Expansion,
peak, decline, trough
Emergence of modern-day macroeconomic policy to moderate effects of
recessions: Keynesian policy/government spending and taxation to
stimulate aggregate demand
Components of aggregate demand and aggregate supply
Shifts in the AD and AS curves: What do they show?
The roots of macroeconomics: John Maynard Keynes and the Great
Depression
Classical vs. Keynesian economics; the short-run vs. long run model of
macroeconomic equilibrium
The Keynesian short-run model and the classical economists’ long-run
model
Keynes’ challenge to Say’s Law: the Demand Driven Economy
Wage and Price inflexibility; the role of Government
Concerns of Inflation (boom times) and deflation (severe economic
downturns)
The impact of recession on trade imbalances
Are all recessions the same? Comparisons of the recent “Great Recession”
to the Great Depression (1930 – 1939)
Reading assignment: Chapter 17 – Government Budgets and Fiscal Policy
 

Chapter 17: Government Budgets and Fiscal Policy

Quiz #2
Defining fiscal policy: taxation and government spending to achieve macroeconomic goals
The role of government in the U.S. economy
Fiscal policy and the Great Recession of 2007-2009
The Employment Act of 1946
The government expenditure multiplier, the tax multiplier
Government spending and taxation
Automatic stabilizers: the income tax, unemployment insurance
Discretionary fiscal policy
Fiscal policy time lags: recognition lag, law-making lag, impact lag
Budget deficits and surpluses; Government debt and deficits; Are they the same thing?
 
Reading assignment: Chapter 14 – Money and Banking

Chapter 14: Money and Banking

What is money?
Commodity and fiat monies; the barter system
Money as a medium of exchange
Money as a unit of account
Money as a store of value
Money supply measures defined: M1 and M2
Economic functions of banks and other depository institutions
How money is created? The money creation process; The money multiplier
How the quantity of money influences the price level and the inflation rate in the long run?
The structure of the Federal Reserve System
The Fed’s balance sheet
The Fed’s Policy Tools
The Money Market: The demand for money; The supply of money; The nominal interest rate
 
Reading assignment: Chapter 15–Monetary Policy and Bank Regulation

Chapter 15: Monetary Policy and Bank Regulation

Monetary policy objectives
Federal Reserve Act of 1913
Goals of monetary policy
Means for achieving the goals
Responsibility for monetary policy
The role of the Fed
The role of Congress
The role of the President
The conduct of monetary policy
The monetary policy instrument
Reading assignment: Chapter 21
 

Chapter 21: Globalization and Protectionism

Review for Final Exam
The history of trade agreements: From GATT to NAFTA and beyond
Trade deficits and trade surpluses
Importance of trade to the U.S. economy; U.S. trade in international
context
Comparative advantage and trade; Terms of trade between nations
Currency exchange rates: how are they determined? The World Trade
Organization: What is its role?
The movement from trade protection toward free trade among nations
since the 1940’s
The dimensions of globalization; trade, foreign direct investment, foreign portfolio investment, immigration; The debate about free trade, globalization, trade protection and fair trade.