ECONOMICS DEPARTMENT

DE LA SALLE UNIVERSITY
COURSE TITLE/CODE:
PREREQUISITE FOR:
TYPE OF COURSE:
FACULTY:

BASIC MACROECONOMICS/ECONTWO
MACRECO, MICRECO
MAJOR SUBJECT
WINFRED M VILLAMIL

COURSE DESCRIPTION
The course aims to provide the student with an understanding and appreciation of
basic theories in economics and its application to current national and international
issues. It exposes students to the tools and methods of economic analysis and how these
can be applied to solve problems. In particular, the course introduces the student to the
field of macroeconomics, a branch of economics concerned with aggregate economic
activity.
The course follows the approach used in the main textbook, which is, to first
examine the economy in the long run when prices are flexible and then to look at its
behavior in the short run when prices are sticky. This approach provides both breadth and
simplicity to the study of macroeconomics.
COURSE OBJECTIVES
(1) To provide the student with a basic understanding of macroeconomics and to
develop their ability to apply the tools and methods of economic analysis to
the world in which they live;
(2) To develop the students skills in economic analysis, critical thinking, and
problem solving through verbal reasoning and the use of graphs and
mathematics to understand economic phenomena and to evaluate economic
policies;
(3) To develop a sense of social responsibility by exposing students to economic
issues affecting societys well-being; and
(4) To equip students with a better understanding of the potentials and limits of
economic policy.
By the end of the course the student should be able to:
(1) Understand the economic challenges faced by modern human society;
(2) Apply some of the tools and methods of economic analysis to a broad range of
business and social issues;
(3) Evaluate the desirability of economic policies and propose alternatives; and
(4) Appreciate the importance of good government in the attainment of an
efficient and equitable social order and the important role that citizens can and
ought to play in promoting good governance.

MAIN TEXT
Mankiw, N. Gregory. 2012. Principles of Economics, 6th Edition, CENGAGE
Learning.
COURSE OUTLINE
I.

Introduction to Macroeconomics (1.5 hours)

The course begins by distinguishing macroeconomics from
microeconomics. This part of the course also gives a concise summary of the
major ideas in modern macroeconomic theory.

II.

Measuring National Income and Prices (3 hours)

The basic interrelationships in macroeconomics are embodied in the
circular flow model. The coverage of macroeconomics starts with measurement,
specifically, the meaning and measure of gross domestic product (GDP) and other
related statistics. This section includes the all-important discussion on the
measurement and use of the consumer price index.
Mankiw, Chaps. 23 and 24

III.

Production and Growth (1.5 hours)

Most nations consider economic growth to be a critical objective because
of its importance in the economic success of countries. This section examines the
determinants of real output growth in the long run and the changes in living
standards over time and across countries.
Mankiw, Chap. 25

IV.

Saving, Investment and the Financial System (1.5 hours)

The description of the real economy in the long run continues with a
discussion of the important role of financial institutions in mobilizing savings for
investments. The student is also introduced to another critical macroeconomic
variable, interest rates and how it is determined. The impact of government
budget deficits is also explained.
Mankiw, Chap. 26

V. The Basic Tools of Finance (1.5 hours)

The financial system plays an important role in the operation of the
economy and many of the insights of finance are crucial for the understanding of
how an economy works. This topic introduces some tools to help us understand
how people make decisions when they participate in financial markets. It may
also help you think through some decisions that you will make some time in the
future.
Mankiw, Chap. 27

First Exam
VI. Unemployment (1.5 hours)
Apart from output growth, employment is another major concern of
macroeconomics. This section considers the determinants of the unemployment
rate in the long run including job search, minimum wage laws, unions, and
efficiency wages.
Mankiw, Chap. 28
VII. Money and Prices in the Long Run (6 hours)
From a description of the long-run behavior of the real economy, the
discussion shifts to the analysis of the behavior of nominal variables of the
economy in the long run. This section highlights the important role of money in
the economy and its long run effects particularly on prices. It also discusses the
costs to society of inflation.
Mankiw, Chaps. 29 and 30
VIII. Open Economy Macroeconomics (6 hours)
This part of the course seeks to explain macroeconomic issues that arise
when an economy interacts freely with other economies. It explains the
relationship among saving, investment and the trade balance assuming price
flexibility and full employment. It also explains the difference between the
nominal and the real exchange rate and the modern theory of purchasing power
parity.
Mankiw, Chaps. 31 and 32

Second Exam
IX. Aggregate Demand and Aggregate Supply (3 hours)
Attention shifts to explaining short run fluctuations beginning with some
facts about the business cycle. The discussion then focuses on explaining the
model of aggregate demand and aggregate supply.
X. Monetary and Fiscal Policy and Its Effect on Aggregate Demand (3
hours)
This section explains how policy makers or governments can use the tools
at their disposal, namely, monetary and fiscal policy to influence aggregate
demand.
Mankiw, Chap. 34

Final Exam

TEACHING METHOD
The teacher will rely primarily on Power Point presentations to explain the topics
contained in the syllabus. However, questions for discussion will be raised from time to
time and students participation in these discussions will be graded.
The exercises are meant to prepare the student for the long exams. A hard copy of
the answers to the exercises has to be submitted on or before the deadline. Otherwise, the
student gets a grade of zero for the exercise unless the failure to submit the homework is
due to an excused absence. Students are encouraged to form groups to discuss answers to
the exercises. However, the photocopying of another persons answers will not be
allowed.
EXAMINATIONS
There will be two long exams and a final examination. A missed exam without a
valid excuse from the University and without proper notification will be given a grade of
zero. No make-up exam will be given for an unexcused absence.
OTHER RULES
1. Attendance will be checked and students who exceed the limit prescribed by
university rules will get a grade of zero in the course.

2. Cheating is a serious offense and will not be tolerated. Possession of

smartphones and other electronic devices during an exam is not allowed. Students
will not be allowed to leave the classroom during an exam. Please note that
according to University rules, students who allow others to copy are equally
liable. It is the responsibility of each student to take the necessary measures to
prevent others from copying their answers to the exam.
3. Elementary good manners dictate that we should not disturb the class by talking
with each other when the teacher is lecturing.
4. Students should turn off their cellular/smart phones during class hours.
ASSESSMENT/EVALUATION
Long Exams
Final Exam
Homework
Recitation

50%
30%
15%
5%

GRADING SYSTEM
Less than 60
60 65
66 71
72 77
78 83
84 89
90 95
96 100

0.0
1.0
1.5
2.0
2.5
3.0
3.5
4.0

CONSULTATION HOURS:
By appointment only:
9:00 1100
1600-1700

T-TH
T-TH

L221
L221

COURSE WEBSITE
Please sign up with our Yahoo Group at ECON2WV. You can ask questions
through this website and you can download the Power Point presentations and other
teaching materials. Important messages will also be posted here.