|
Introduction
and General Course
Information |
INSTRUCTOR: J.
Hubert
OFFICE: 301
Fine Arts Building
PHONE: 206 587 2037
E-MAIL: jhubert@sccd.ctc.edu
Homepage: Mr. Hubert's
Homepage
Course
Homepage: ECON% 202
Correspondence
TEXT:
PRINCIPLES
OF MACROECONOMICS, N. Gregory Mankiw, 5th Edition
COURSE DESCRIPTION:
ECONOMICS
John
Maynard Keynes gave us interesting perspective on the role of economics:
The theory of economics does not furnish a
body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an
apparatus of the mind, a technique of thinking which helps its possessor to
draw correct conclusions.
The typical textbook definition of economics emphasizes the importance of scarcity:
Economics is the study of how to best allocate scarce resources among
competing uses: guns or butter types of
questions.
ECON% 202, MACROECONOMICS: an overview
Macroeconomics
focuses on the economy as a whole, or major subdivision of it. Topics to be discussed include: scarcity, choice, national income and
wealth, the public sector, unemployment, inflation, business cycles, money and
banking, fiscal and monetary policies, financial markets and international
trade.
Macroeconomics
courses involve supply and demand concepts, the measurement of economic
activity, money and banking, trade, international finance, fiscal issues
(government, individual, household, and business) and the institutional
framework within which economic decisions are made. The role and decisions of NGOs will be explicated recognized as
part of an economy’s structure.
This
correspondence course has been divided into 10 lessons, a mid-term exam, and a
final exam.
Learning Outcomes:
To be able to understand and apply
the Economic Way of Thinking as presented in the Mankiw textbook and
its application to the world of macroeconomics. The first aspect of this quest
is to gain an understanding of the vocabulary of economics, learning economic
definitions and concepts. Then the student acquires the ability to apply these economic concepts to a variety of
issues and topics involving human behavior.
Each lesson has a more explicit set of learning outcomes. Students should review these outcomes periodically and acquire a clear understanding of each outcome.
COURSE PREREQUISITES:
The
formal prerequisites for Principles of Macroeconomics (ECO 202) are ECO 201 or
MAT 098 (Intermediate algebra). Note:
ENG 101 is recommended.
READING ASSIGNMENTS:
WRITTEN ASSIGNMENTS:
Each
lesson includes a written assignment
consisting of Questions and Problems from the textbook to be turned
in to the instructor for evaluation.
Students who do not have an understanding of chapter materials and
questions will have little chance of passing the midterm and final
examinations.
Students
should expect to spend 4 to 6 hours on each lesson.
All
assignments are to be typewritten
(double-spaced), on 8 1/2 x 11 paper, and identified using the Lesson
Identification Form provided, with course number, name, date, and assignment
number. Grammar and spelling will be
included in the grading algorithm.
Graphs are to be neatly drawn with a straight edge and appropriately
labeled.
Students are strongly urged to make copies
of each assignment to guard against loss of the original in transit.
EXAMS:
The
midterm exam will cover chapters 1 - 11 (lessons 1 – 5) in the Mankiw text; the
final exam will cover chapters 12 – 21 (lessons 6 – 10).
Each
exam will consist of 50 multiple-choice questions. These are closed-book tests, with no notes
allowed. You will have 90 minutes to
complete each exam. Each exam is worth
100 points.
Students
should prepare for examinations by studying the assigned textbook materials. A
sample self-exam is provided to give you an idea of the type and nature of the
exam questions. The self-exam questions
are drawn from an extensive test bank covering the entire textbook.
Please
bring a Scantron, paper, hand calculator and pencils to the exams.
GRADING:
POINTS:
Mid-term Exam 100 points
Final Exam 100 points
Homework (10) 0 points *
----------------------------------------
Total 200 points
*
NOTE: ALL homework must be
satisfactorily completed in order to receive a passing grade.
GRADE SCHEDULE:
GRADE MINIMUM % OF TOTAL
POINTS
3.5
90 %
2.5
76 %
1.5
62 %
0.7
0 %
0.0
Less than 50 %
ASSIGNED CHAPTERS:
|
|
Lesson |
Chapter |
|
Lessons |
Chapters |
Topics |
|
|
|
|
|
1 |
1 |
Ten Principles of Economics |
|
|
2 |
Thinking Like an Economist |
|
2 |
3 |
Interdependence and the Gains
From Trade |
|
|
4 |
The Market Forces of Supply
and Demand |
|
3 |
5 |
Elasticity and its Application |
|
|
6 |
Supply, Demand, and Government
Policies |
|
|
7 |
Consumers, Producers, &
the Efficiency of Markets |
|
4 |
8 |
Application: The Costs of
Taxation |
|
|
9 |
Application: International
Trade |
|
5 |
10 |
Measuring a Nation's Income |
|
|
11 |
Measuring the Cost of Living |
|
|
|
Midterm exam units 1-5 |
|
6 |
12 |
Production and Growth |
|
|
13 |
Saving, Investment, and the
Financial System |
|
7 |
14 |
The Basic Tools of Finance |
|
|
15 |
Unemployment |
|
8 |
16 |
The Monetary System |
|
|
17 |
Money Growth and Inflation |
|
9 |
18 |
Open-Economy Macroeconomics:
Basic Concepts |
|
|
19 |
A Macroeconomic Theory of the
Open Economy |
|
10 |
20 |
Aggregate Demand and Aggregate
Supply |
|
|
21 |
The Influence of Monetary and
Fiscal Policy on Aggregate Demand |
Reading tips: Identify economic concepts, theories, and
terminology. (Take special note of
graphic analysis and economic models.)
Relate these to examples and applications shown in each chapter. Generalize these concepts and theories to
other applications based on your experiences and observations.
Finally
test your understanding by answering the assigned questions. Application of the theory, that is, economic
analysis of issues and problems is the key to “understanding how the world
works.”
Consider the following examples:
·
Market
Mechanism Example: If the supply of turkeys in a particular
November turned out to be unusually small, do you think a turkey shortage would
result? Why or Why not?
·
(Note: Graphical representation of the market is
important in analyzing a host of market and price related situations. A graph will help understand and support the
correct answer.)
·
Minimum
Wage Example:
An example from chapter six: A minimum
wage law will adversely affect employment, especially among the young and
unskilled workers. Your analysis of a
minimum wage law would include a graphical representation of a surplus of labor
(shortage of jobs) at any wage rate greater than equilibrium. This surplus of labor forces employers to
discriminate in hiring. Such
discrimination will take a predictable form: discrimination in favor of more
productive or skilled units of labor…the young and unskilled will be
harmed. Your objective analysis of such
a law may lead you to question the conventional wisdom of current politics.
·
Self-Interest
Example: When Mother Teresa accepted the Nobel Prize
for Peace in October 1979 and decided to use the $190,000 award to construct a
leprosarium, was she acting in her own interest? Was she behaving selfishly?
Economists assume that people act in their own self-interest. People act rationally in the sense that they
do not intentionally harm themselves. Such an assumption allows us to explain
and predict behavior.
·
Marginal
Analysis Example: What factors come into play when a consumer
or a household considers buying a durable good such as an automobile or a
refrigerator? The answer is a very
powerful - and useful - concept: the expected marginal benefit and the expected
marginal cost (which, by the way, is the opportunity cost).
·
Circular
Flow Diagram Example: Using a circular flow diagram, show what
might happen in the product and resource markets if households decided to save
more of their income.
·
Opportunity
Cost Example: Will the U.S. allocate resources for the
production of the B-2 bomber? If so, at
what cost? A reduction in resources
allocated to other goods or services such as education or health care. As you see, the answer incorporates the
notion of opportunity costs.
·
Interest
Rate Example: During periods of the 1970s, real interest
rates in the U.S. were low or even negative.
How can bankers and other lenders carry out their business when they are
lending at negative interest rates?
·
Trade
Creates Wealth Example: Trade literally creates
wealth out of thin air by rearranging the pattern of goods and/or services to a
higher valued pattern. (See appendix
I). Both traders must assume that the
act of voluntary exchange will make themselves “better off” or they would not
enter into the exchange or trade. Third
world countries trade with first world countries and both are made wealthier. Question: What is wealth? Answer: Wealth is what we value! It is a purely subjective notion.
Preparing for Your Final
Examination
Your
Final Examination will consist of 50 multiple-choice questions. This is a closed book examination, with no
notes allowed. You will have 90 minutes
to complete your examination. Your
Final Examination is worth 100 points toward your final grade.
Students
should prepare for their final examination by studying the assigned textbook
readings.
|
At this time, you have completed all
assignments necessary to take your Final Examination. You must request an examination using the Examination Request Form provided.
Thoroughly review the instructions on this form prior to requesting the
examination. A sample self- exam has been provided at the end of Lesson
11 of this Study Guide to illustrate the types of
questions you might be asked on your midterm and final
exams. You should bring a Scantron, calculator, paper and pencils to your
examination. |
Consider the following analysis of voluntary exchange…trade:
HOW TRADE
CREATES WEALTH (out of thin air)!
Economists
world over tend to support the notion of free trade. Why is this concept so widely supported by
economists, the experts specializing in these issues? Their support rests on the concept of mutually
advantageous gains from trade… that both partners in a voluntary
exchange tend to be made better off.
Trade rearranges
patterns of goods and services to a higher valued pattern. Consider the
following scenario: It is early morning and I want a cup of coffee. Fortunately
for me the vender in the lobby is open for business and has fresh, hot coffee
for sale. The vender is offering coffee at $1.00 per cup. The initial pattern and the revised, after
trade, pattern are shown in the following table:
|
ME |
COFFEE VENDER |
|
$1.00 |
Cup of coffee |
|
Cup of coffee |
$1.00 |
I trade $1.00 for a cup of coffee. Since I voluntarily enter
into an exchange I must expect to be better off after the trade. My
participation provides evidence that I place a higher value on the cup of
coffee than the one-dollar bill. The vender, on the other hand, must
place a higher value on the dollar than on the cup of coffee. Again, the trade
provides evidence of his preferences. He must expect to be better off after the
trade. We both expect to benefit or gain from this action. (Remember that
actions, not words, reveal preferences.)
This is an example of mutually advantageous gains from trade.
Again, we have evidence that the participants expect to be made better off
after the trade - voluntary participation!
Comment: Given this clear example of the gains from voluntary trade,
it is difficult to understand those who question the function of international
institutions - such as the WTO,
which have been created to facilitate trade.
Appendix ll
Typical Multiple-Choice Questions:
A
large increase in the legal minimum wage is most likely to benefit
B. unemployed workers.
C. unionized workers.
D. unskilled workers.
E.
none of the above because price-fixing hurts everyone.
Answer: C,
unionized workers
B. Highly skilled workers.
C. Shareholders of large corporations.
D. Teenagers.
E.
Unskilled workers
Answer: B, highly
skilled workers
YOUR INSTRUCTOR:
Jim Hubert took his Master of Arts in Economics at the
University of Washington in 1973. His
undergraduate degree is in Business Administration from Washington as
well. He currently is a tenured faculty
member at Seattle Central where he teaches economics and statistics. He has taught Money and Banking at the
University of Puget Sound and Real Estate Appraising at both Seattle University
and Seattle Pacific University. Hubert
has nearly 17 years in the banking profession, including eight years as Vice
President and Economist for the Federal Home Loan Bank of Seattle.
Revised: August 2009