OUTLINE/READING LIST

Ch. refers to a chapter in the textbook Macroeconomics: Theories and Policies seventh edition, by Richard T. Froyen, which is available in the bookstore. There is also a study guide available in the bookstore associated with the textbook.

I. Introduction: The Topic of Study: the "Ultimate" Variables and Course Overview

Ch. 1 "Introduction and Measurement", pp. 3-14.
Ch. 2 Sects. 2.6 and 2.7, pp. 25-30.
Ch. 3 Sects. 3.1 and 3.2, pp. 37-40.

II. The Classical Model

A. The Production Function: the Determination of Real Output

Ch. 3 Sect. 3.3, pp .40-43.

B. The Labor Market: the Determination of the Real Wage and Employment

Ch. 3 Sect. 3.4, pp. 43 - 50.

C. Equilibrium Output, Employment, the Real Wage, and the Aggregate Supply Curve

Ch. 3 Sect. 3.5, pp. 50-58.

D. The Quantity Theory of Money: the Determination of the Price Level

Ch. 4 "The Quantity Theory of Money" up to "The Cambridge Approach to the Quantity Theory", pp. 60-62.
Ch. 4 "The Classical Aggregate Demand Curve" up to "The Classical Theory of the Interest Rate", pp.64-66.

E. The Loanable Funds Market: the Determination of the Interest Rate

Ch. 4 Sect. 4.2 ", pp.66-71.

F. A Change in Government Spending in the Classical Model

Ch. 4 "Fiscal Policy", up to "Tax Policy", pp.71-73.

G. The Complete Classical Model

1. Solving the Model

2. Some Comparative Statics

H. The Classical Model with a Rigid Real Wage and Voluntary Unemployment

III. The Keynesian Model

A.Keynes' Critique of Classical Unemployment

B. Mark's Magic Circle and Keynes' Critique of (the Classical) Say's Law

Ch. 2 Sects. 2.1-2.5, pp.15-25.
Ch. 5 Sect. 5.1, pp.80-83.

C.The Consumption (and Savings) Functions

Ch.. 5 "Consumption", pp.88-90.
Ch. 20 "Consumption" up to "The Life Cycle Theory of Consumption", pp.462-467.
Ch. 20 "Declining U.S. Personal Saving," p. 473.

D. Investment

Ch. 5 "Investment", pp.90-92.

E. Government Spending

Ch. 5 "Government Spending and Taxes" pp. 92-93.

F. Net Exports

G. The Income/Expenditure Model: Equilibrium, Comparative Statics, and the Multiplier

Ch. 5 Sect. 5.4, pp. 93-97.
Ch. 5 Sects. 5.5-5.8, pp. 97-108.

H. The Keynesian Money Market and the Determination of Interest Rates

Ch. 6 Sect. 6.1, "The Keynesian Theory of the Interest Rate" up to "The IS-LM Model," pp. 114-124.

I. The IS-LM Model

1. Generating the LM Curve and Shifts in the LM Curve

Ch. 6 Sect. 6.2, pp. 124- bottom of 128.
Ch. 6 "Factors that Shift the LM Schedule" up to "Product Market Equilibrium:
the IS Curve", pp.130-135.
Ch. 6 "Appendix " up to "A.2", pp. 149-151.

2. Generating the IS Curve and Shifts in the IS Curve

Ch. 6 Sect. 6.1, "Money in the Keynesian System" up to "The Keynesian Theory of the Interest Rate," pp. 111.-114.
Ch. 6 "Product Market Equilibrium: the IS Curve", pp.135-146, and Appendix
A.2 pp.151-152.

3. Equilibrium: the Determination of Income (Output) and the Interest Rate

Ch. 6 "The IS and LM Curves Combined ", pp.146-148, and Appendix A.3 p.
152.

4. Comparative Statics: Fiscal and Monetary Policy

Ch. 7, pp. 153-177.

J. A Keynesian Labor Market and Aggregate Supply Curve, and the Complete
Keynesian Model Diagramatically

K. Post-Keynesianism

L. Phillips Curve

IV. Monetarism

A. Monetarism and the IS/LM Diagram

Ch. 9 Sect. 9.1, pp. 216-218.
Ch. 9 "The Reformulation of the Quantity Theory of Money" up to "Money and the Early Keynesians," pp. 218-219.
Ch. 9 "The Monetarist View of the Great Depression ", p.222.
Ch.9. "Friedman's Monetarist Position" pp.226-236.
Sect. 9.5, pp. 236-237.

B. Monetarism and the Labor Market, the Production Function, the Aggregate Supply/Aggregate Demand Diagram, and the Phillips Curve.

Ch. 10 Sect. 10.2, pp. 241-248.
Ch. 10 Sects. 10.4 and 10.5, pp. 254-257.

C. Instrumentalist Methodology

V. New Classical Economics

A. Rational Expectations

Ch. 11 "New Classical Economics " up to "The New Classical Policy Conclusions", pp.259-266.
Ch. 11 "U.S. Stock Prices" up to "Review Questions and
Problems", pp.269-279.

B. Real Business Cycle Theory

Ch. 12 Sect. 12.1, pp.280-289.

C. Supply-Side Economics

Ch. 4 "Supply Side Effects" up to "Monetary Policy", pp.74-76.
Ch. 4 "Supply-Side Economics-A Modern Classical View", p. 77.
Ch.19 "A Possible Reversal in U.S. Growth Trends" up to "Review Questions and Problems", pp.446-461.

VI. New Keynesian Macroeconomics

Ch. 12 Sects. 12.2 and 12.3, pp.289-296.

VII. Fiscal Policy

Ch. 18 Sects. 18.3-18.7, pp.412-426.

VIII. Monetary Policy

Ch. 17 "The Monetary Policy Making Process" up to "Competing Strategies for Monetary Policy: Targeting Monetary Aggregates or Interest Rates", pp.385-387.
Ch. 16 Sects. 16.1-16.4, pp.363-381.

Syllabus

I. Course Description/Objectives

This course analyzes the explanations offered by various macroeconomic schools for the determination and role of national output, national income, the price level, employment, interest rates, wages, investment, savings, consumption, and the money supply. We will also examine the importance of government expenditures, exports, imports, taxes, and productivity. Related topics will include inflation, the unemployment rate, fiscal policy, monetary policy, and business cycles. By the end of this course, students should be able to use and assess a number of macroeconomic models to explain the determination and role of the major aggregate variables. Students should also develop capabilities in analyzing data and understanding its role when utilizing these models. Finally, students should be able to utilize both theory and data to understand important policies affecting the macroeconomy.

II. Evaluation

There will be 1 midterm. It will be on Thursday March 13, and will count for 25% of the total grade. There will also be 4 quizzes, each counting for 5% of the total grade. The quizzes are scheduled for Feb. 20, March 6, April 3, and April 17. There will also be a cumulative final exam worth 35% of the grade. An early makeup on the midterm exam or on a quiz is possible with an excused absence. However, there will be no late makeups on quizzes. If a student is physically incapable of taking a quiz and has not taken an early makeup, the final exam will simply count for more of their total grade, accordingly. For instance, if they miss one quiz, their final exam will count for 40% of their total grade. If a student is physically incapable of taking the midterm and has not taken an early makeup, they will be given a late makeup which will be a much more difficult and challenging "essay" exam. Finally, each student will participate in a debate which will count for 20% of their final grade. Students wishing to try additional problems should try problems from the study guide, and from the old exams on line.

III. Possible Debate Topics

Increasing the Minimum Wage
Privatizing Social Security
Labor and Environmental Standards in Free Trade Agreements
Monetary Policy
Making the Bush Income Tax Cuts Permanent

IV. Office Hours

My office hours in Holland Hall 406 are:

M 1:00 -3:15
W 1:00 -3:15

or by appointment. I am usually around at other times, but be sure to call first at x-3432 to make sure I'm in. You may also wish to correspond with me by email.

Exams for Studying (requires PDF viewer plugin)
Spring 1990 - Exam 1
Spring 1991 - Exam 1
Fall 1991 - Exam 1
Spring 1994 - Exam 1
Fall 1994 - Exam 1
Fall 1994 - Final Exam
Spring 1995 - Exam 1
Spring 1996 - Exam 1
Spring 1998 - Exam 1

Spring 1999 - Exam 1
Spring 2000 - Exam 1
Spring 2001 - Exam 1

Exam 2
1993 - Exam 2
1991 - Exam 2
Fall 1991 - Exam 2
Spring 1992 - Exam 2
Spring 2000 - Exam 2
Spring 1994 - Exam 2
Spring 1995 - Exam 2
Spring 1996 - Exam 2
Spring 1998 - Exam 2
Spring 1999 - Exam 2
Spring 2001 - Exam 2

Finals
Fall 91
Spring 91
Spring 92
Spring 96
Final (no year)
Spring 98
Spring 99
Spring 2000