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COURSE OUTLINE FOR ECON 1101 – MACROECONOMICS

New York City College of Technology - CUNY


Social Sciences Department
FALL 2018

ECON: 1101, Section E614 /Classroom: N/403


TITLE: Macroeconomics
Class Hours: 3, Credits: 3

Instructor: Dr. Fangxia Lin


Email: fxlin@citytech.cuny.edu
fangxial@hotmail.com
Office Location: N600
Office Hours: F, 8:30-9:00 PM
And/or by appointment
Phone: 718-614-7259

COURSE DESCRIPTION: Fundamental economic ideas and the operation of the


economy on a national scale. Production distribution and consumption of goods and services, the
exchange process, the role of government, the national income and its distribution, GDP,
consumption function, savings function, investment spending, the multiplier principle and the
influence of government spending on income and output. Analysis of monetary policy, including
the banking system and the Federal Reserve System.

COURSE PREREQUISITE:
CUNY proficiency in reading and writing

RECOMMENDED TEXTBOOK & MATERIALS

Principles of Macroeconomics, Author: Timothy Taylor, Publisher: Open Stax College, Year Published:
2015, This book is FREE in PDF and web based versions and can be obtained from
https://d3bxy9euw4e147.cloudfront.net/oscms-prodcms/media/documents/Macroeconomics2e-
OP.pdf
If you wish to obtain a hard copy, these are available for $33 and can be ordered from the site:
www.openstaxcollege.org
Open Lab: Please sign up for an Open Lab account if you do not already have one, and join the course
at https://openlab.citytech.cuny.edu/groups/econ-1101-macroeconomics-fall-2018/

The text, week-by-week schedule, exam dates, etc. will be posted on this site.

Other readings

Additional readings (short articles) will often be assigned along with chapter readings. These will include
discussion questions for the following week’s class.

SUPPLEMENTARY READINGS WILL ALSO BE INCLUDED FROM


SOURCES INCLUDING THE FOLLOWING:

The New York Times http://www.nyt.com


The Federal Reserve (interest rates; national economic policy analysis) http://federalreserve.gov/
New York Federal Reserve Bank http://www.newyorkfed.org
The Economist http://www.economist.com
Fiscal Policy Institute http://www.fiscalpolicy.org
Economic Policy Institute http://epinet.org/
U.S. Bureau of Labor Statistics, U.S. Dept. of Labor http://bls.gov
NYS Department of Labor www.labor.state.ny.us
U.S. Census www.census.gov
The Financial Times http://www.ft.com/home/us
The Wall Street Journal www.wsj.com

Many of these sites can also be accessed through the CUNY portal.

BLACKBOARD: Blackboard will be used to post the course syllabus, supplemental


readings, articles and discussion board assignments and all class assignments. It will also be
used to post announcements and occasionally for email.

If you have not accessed Blackboard yet or do not yet have an account, you should go to the
computer center on the 6th Floor (G/600) to get set up with a user name and password. You should
also remember to use your assigned CityTech/CUNY email address to access email announcements
sent to the class.

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COMPONENTS OF SEMESTER GRADE AND WEIGHT OF EACH:
The final grade is based on the following:
 Quiz 20 %
 Midterm exam 35 %
 Final exam 35 %
 Class participation/attendance 10 %
____________________________________________________________________________
Total 100%

(The class participation/attendance is evaluated as follows: 0 – 2 abs: 100; 3 abs: 85; 4 abs: 75; 5 or more:
50).

SEQUENCE OF TOPICS AND REQUIRED READINGS

ECON 1101 – Macroeconomics – Semester Schedule FALL 2018

Week 1: Chapter 1: Welcome to Economics


(F: 8/31/2018) 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

Week 2: Chapter 3: Demand and Supply


(F: 9/7/2018)
Reading assignment for next session: Chapter 3−Demand and Supply

Product and Resource Markets – Role of households (consumers) and firms


What is a market?

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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

Week 3: Chapter 6: The Macroeconomic Perspective


(F: 9/14/2018) Review for quiz 1: chapters 1 & 3 (30 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

Week 4: Chapter 8: Unemployment


(F: 9/21/2018)

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

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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

Week 5: Chapter 9: Inflation


(F: 9/28/2018)
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

Reading assignment: Chapter 11 – The Aggregate Demand/Aggregate


Supply Growth

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


(F: 10/5/2018)

Week 7:
(F: 10/12/2018) MIDTERM
Reading assignment: Chapter 11 – Aggregate Demand/Aggregate Supply
Model

Week 8: Chapter 11: Aggregate Demand/Aggregate Supply Model


(F: 10/19/2018) 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

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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
Week 9: Chapter 12: The Keynesian Perspective
(F: 10/26/2018) Chapter 13: The Neoclassical Perspective
Review for quiz #2: 30 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 13 – Fiscal Policy

Week 10: Chapter 17: Government Budgets and Fiscal Policy


(F: 11/ 2/2018) 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

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Week 11: Chapter 14: Money and Banking
(F: 11/9/2018) 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

Week 12: Chapter 15: Monetary Policy and Bank Regulation


(F: 11/16/2018)
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

Week 13 Ch. 21: Globalization and Protectionism


(F: 11/30/2018)

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.

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Week 14 Review
(F: 12/7/2018) (Chapters 11, 12, 13, 14, 15, 17, and 21)

Week 15
(F: 12/14/2018 Final Exam

FINAL EXAM: DEC 14, 2018

POLICY ON MAKE-UP ASSIGNMENTS/EXAMS:


Students will be allowed to complete a make-up of the midterm exam only if they have a valid
excuse for being absent from the exam on the assigned date.
There will be no option to make up the final exam except in the case of a valid/documented absence
on the scheduled exam date.
Exams will cover required readings from the text. Students should expect to spend a minimum of
7-8 hours a week of study on the course outside of classroom time. Study groups are highly
recommended as a very effective studying and learning method.
Students are strongly encouraged to ask questions about the material, to actively participate in class
discussions and to collaborate with other students.

METHODS OF INSTRUCTION:
 Regular in-class discussion of assigned text and supplemental readings; review of material in
short exercises at end of chapters, homework assignments.
 Question – Answer technique to encourage class participation.
 Use of visual aids, graphical, arithmetical, and diagrammatical illustrations in the presentation
of lessons.

METHODS OF STUDENT EVALUATION:


 Class Exams – Midterm and Final Exams (Format: Multiple choice and problem sets/short
answer questions).
 Two quizzes (30 multiple choice questions each).
 Homework assignments and readings for every chapter covered.
 Class attendance and participation.

COURSE POLICIES
In order to maintain an atmosphere conducive to learning and that is not disruptive to others, the
following must be observed.
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 More than two absences will adversely affect your final grade. For this class, there is a
maximum of two missed classes during the semester. Missing any classes requires much effort
to “catch up,” absences are strongly discouraged.

 Students are expected arrive on time for class; consistent lateness and leaving class early will
affect your final grade.

 There will be no break for the classes.

 Cell phones, text messaging devices must be turned off and put away during class time. They
may not be used at all during class time or during exams. These are disruptive to the class and
to other students.

ADVICE TO STUDENTS
Economic analysis sometimes appears more difficult than it really is because of its use of
graphs and algebra, its tendency to abstract from reality by making simplifying assumptions and its
overwhelming emphasis on a limited range of human motives. The mathematics skills you need are
readily learned or refreshed (see, for example, the appendix to Chapter 1 of your text).
Despite the sometimes dry reasoning and base motives employed in economic analysis, the
course will provide you with important skills that are essential in the business world and are very
useful in managing your own personal financial affairs.

To do well in the course, you will need to read the text carefully, and work through the assigned
exercises, problems and cases consistently each week. Reading economic and business news in
current periodicals will help you understand the relevance and importance of what you are learning,
as well as helping you apply and reinforcing your understanding of economic principles. The course
builds cumulatively, and it is very important not to get behind in your readings and assignments.

Form a study group to debate Paul Krugman's Op Ed pieces in the New York Times on
Mondays and Fridays. Such study groups are a wonderful way to motivate your interest, effort and
comprehension and can easily generate "A" level work.

You are welcome to discuss any concerns and questions after class. STUDY HARD AND
GOOD LUCK!

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COURSE INTENDED LEARNING OUTCOMES/ASSESSMENT METHODS: To
develop an understanding of the fundamental concepts of macroeconomics and the workings of the
national economy. Specifically, course objectives include the following:

LEARNING OUTCOMES ASSESSMENT


METHODS

1. Demonstrate an understanding the basic economic 1. Regular in-class


decisions that underlie the economic process: What and discussions of readings;
how to produce goods and services and how they are review of material in
distributed. short exercises at end of
chapters, homework
2. Understand the concepts of scarcity, choice and assignments and class
opportunity cost and apply these concepts to the discussions.
analysis of the workings of a market economy.

3. Demonstrate a firm knowledge of the 2. two quizzes: (30 multiple choice


interrelationships among consumers, government, questions each)
business and the rest of the world in the U.S.
macroeconomy.
3. Homework assignments consisting
4. Identify the process of how the nation’s output of of problems at end of chapters
goods and services is measured through the national covered in class; These must be
income and product accounts; clearly comprehend the submitted in the week following
income and expenditure approaches to measuring week’s class.
national output and national income.

5. Acquire the ability to clearly illustrate the specific 4. Midterm exam (covering the first
roles and functions of monetary and fiscal policy in the half of the class)
economy and explain how these are applied to the
process of shaping economic policy and stabilizing the Fo Format: Multiple choice questions and
economy, specifically with regard to controlling problem sets/short answer questions.
inflation, promoting full employment and facilitating
economic growth.

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5. Final exam. (material and chapters
6. Explain the process of how fiscal policy is enacted covered from the midterm to the end
and how its functions – taxation and spending – are of the semester)
designed to achieve the goals of equilibrium between
Aggregate Demand and Supply; develop a firm Format: Multiple choice questions
understanding of the differences between, and the and problem sets/short essay
specific roles of, discretionary fiscal policy and questions.
automatic stabilizers in stabilizing employment,
income.

GENERAL EDUCATION LEARNING OUTCOMES/ASSESSMENT METHODS


LEARNING OUTCOMES ASSESSMENT METHODS
1. KNOWLEDGE: To develop an introductory Quiz on basic concepts; multiple choice and
understanding of macroeconomic concepts, short essay questions on exams.
topics and theories of how to address
macroeconomic problems

2. SKILLS: Develop and apply the tools of Discussion assignments structured to focus
macroeconomic analysis to critically question, on a current economic problem or issue;
analyze, and discuss economic problems and students analyze, evaluate and consider
issues; Develop and strengthen the ability to policy options to address.
discuss concepts and thoughts in writing.

3. INTEGRATION: Apply the tools of Problem sets; short answer questions on


macroeconomic analysis and the economic midterm and final exams.
perspective to the understanding of other
disciplines.

4. VALUES, ETHICS, AND Weekly in-class group assignments;


RELATIONSHIPS: Develop and understanding assignments encourage student discussion
of and ability to apply diverse perspectives to and sharing of ideas and perspectives.
the understanding of macroeconomic issues;
work creatively with others in group problem
solving; develop a respect for diverse
viewpoints; apply the skills and concepts
covered in the course to the analysis of related
issues and concepts across other disciplines

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ACADEMIC INTEGRITY POLICY STATEMENT
Students and all others who work with information, ideas, texts, images, music, inventions, and
other intellectual property owe their audience and sources accuracy and honesty in using, crediting,
and citing sources. As a community of intellectual and professional workers, the College recognizes
its responsibility for providing instruction in information literacy and academic integrity, offering
models of good practice, and responding vigilantly and appropriately to infractions of academic
integrity. Accordingly, academic dishonesty is prohibited in The City University of New York and
at New York City College of Technology and is punishable by penalties, including failing grades,
suspension, and expulsion. The complete text of the College policy on Academic Integrity may be
found in the catalog.

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