General Office: Fax Mount Royal University. Economics 2213 formerly 3303 Intermediate Economic Theory - Macroeconomics I

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1 Department of Policy Studies General Office: Fax Mount Royal University Economics 2213 formerly 3303 Intermediate Economic Theory - Macroeconomics I Course Outline Why study Economics? The best answer is given by J.M. Keynes, one of the foremost economists of this century, in his 1936 classic, The General Theory of Employment, Interest and Money: The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who ear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated when compared with the gradual encroachment of ideas.

2 Textbook & References : Dornbusch, R., S. Fischer, R. Startz, F. J. Atkins, and G. R. Sparks, Macroeconomics, Seventh Canadian Edition, McGraw-Hill Ryerson, Montreal, Note: A second year macroeconomics theory course explores a body of knowledge that has evolved out of the work of a number of scholars over the last two centuries. While the textbook is the most relevant source of information to you, material will be drawn from other sources as well. In particular parts of the course will rely on the following books as their main relevant source. These sources are available in the Mount Royal Library or at the University of Calgary. It is neither necessary nor desirable that you purchase these sources. You are responsible for all readings assigned in this syllabus and through my instructions during class some of which will be from these sources. In addition you may wish to read more than one source to gain a solid knowledge and a comparative perspective of some parts of the theory. Abel, A., B. E. Bernanke, G. W. Smith and R.D. Kneebone, Macroeconomics, Fourth Canadian Edition, Pearson-Addison-Wesley, Bogan, E., and J. J. Kiernan, Macreconomics theory and applications, West, St. Paul, Froyen, Richard T, Macroeconomics: Theories and Policies, Seventh edition, Prentice Hall, New Jersey, 2002 Gordon, Robert J., Macroeconomics, Ninth Edition, Harper-Collins, New York, Parkin, M., and R. Bade, Modern Macroeconomics, Fifth Edition, Prentice-Hall, Scarborough, Ontario, 2001 Peterson, W. C., Income, Employment, and Economic Growth, 6th edition, Norton, New York, Williamson, Stephen D., Macroeconomics, First Canadian edition, Pearson-Addison Wesley, Toronto Wilton, D. A., and D. M. Prescott, Macroeconomics Theory and Policy in Canada, Third Edition, Addison-Wesley, Don Mills, Ont., Mount Royal University, Library-on-line, (provides you with Internet linkage to macroeconomic data for Canada and other economies for the relevant period of study. 2

3 Learning Outcomes: An education at Mount Royal University ensures that upon graduation with a diploma or degree you will gain competencies in the following six areas: Communication Computer Literacy Thinking Skills Ethical Reasoning Information Retrieval and Evaluation Group Effectiveness It is intended and expected that each course a student successfully completes at the university will develop at least one of these competencies. It is not intended that all competencies should be included in each course. Building upon this principle each program, by combining an integrated sequence of courses will ensure that upon graduation, a student will have acquired the desired level of competency in all the specified areas. In intermediate macroeconomic theory I the learning outcomes that form the major themes are: Communication Computer Literacy Thinking Skills Ethical Reasoning Information Retrieval and Evaluation The instructors in the Department of Policy Studies at Mount Royal University, have developed specific learning objectives to accompany the instructional materials for Intermediate Macroeconomic theory I. The objectives are measurable in terms of demonstrated ability to analytically process mathematical and graphical analysis and to present, explain and criticize formal economic models at the second year level of macroeconomic area. The learning objectives are available through the department TLM-lab software and will form the basis for the structure and approach to testing the curriculum through assignments, and examinations Mick Jagger and Arnold Schwarzenegger both studied economics and look how they turned out. - Source Specific Course Objective: This course will acquaint you with intermediate macroeconomic theory expanding upon principles learned previously in an introductory macroeconomic theory course (Econ 1103). The course will explore in depth the Hicks-Hansen and Mundell-Fleming macro models of the economy (IS-LM-BP). The model will be expanded to incorporate the AD-AS model under static expectations. Discussion of Classical, Keynesian, New- Classical, and New-Keynesian applications with fixed and flexible pricing and exchange rates will be introduced. Method: The approach to the material will be lecture-discussion 3

4 Mark Determination: Final course grades are calculated as a weighted average for the participation, assignments and exams according to weighting and assessment structure outlined in the evaluation section on the next page where percentage grades are used on components of the course they will be converted from your final percentage grade to a letter grade using the following conversions = A = A = A- Percentage - letter grade correlation = B = C D = B = C D = B = C F Evaluation: Your grade in the course will be determined by a weighted average of: Assignments Mid Term Exam Mid Term Exam Final exam (scheduled by I II registrar) 20% 20% 25% 35% Assignments: (20%) Learning outcomes: Basic computer literacy Numeracy, including working with data, statistics, graphs and algebra Group effectiveness Demonstrating personal accountability and self-direction This mark will be determined by a weighted averaging of your marks for 2-4 assignments and by your mark on a budget review project. The data for the assignments will be issued by computer on the TLM-system. An orientation will be available in room EA 2065 early in the term to acquaint you with the TLM-System and its features. The lab room EA2065 is open and supervised 37 hours per week by Mr.. Term Tests & Final Exam (80 % ) Learning outcomes are to develop skills in: Critical thinking, through demonstrated quantitative literacy, including working with data, statistics, graphs and algebra Independent thinking, through the demonstration of the ability to explain and analyze economic models for logical consistency and sequence of argument. Communication through use of mathematical language and graphical presentation as well as through sequential verbal argument. Information evaluation, through the ability to use economic models and discuss and apply specific macroeconomic theory. 4

5 Term Tests::(20% Term test I and 25% Term test II) Each exam will be 75 minutes and will be a combination of short answers, problems, and essay. Final Exam: (35 %) This will be a comprehensive two-hour examination. You are responsible for preparing yourself to be tested on any portion of the theoretical models learned throughout the course The decision is mine but the class will be consulted on to what extent the final exam will place emphasis on the last section of the course. It will be scheduled by the Registrar's Office during exam week. If you anticipate difficulty in attending the final examination, you must comply with the University policies for deferment (see relevant pages in the University Calendar). In the event that the anticipated difficulty is not acceptable to the university policy, arrangements should be made with employers to ensure attendance or you exercise your option for course withdrawal. NOTES: 1. You need not receive a passing mark on any particular component, but failure to submit any assignment or sit for any exam will result in an `F' grade for the entire course. 2. No `make-up' exams will be given. If you find it necessary to miss an exam or assignment, notify me in advance or produce a doctor's certificate. At my discretion, the weighting for the missed component may be reassigned to another component of the course. 3. Make yourself familiar with the University's regulations and policies covering students' responsibilities and rights. Rules for writing exams are printed on the of the university exam booklets and the rules for academic conduct are in the University Calendar. 4. Late assignments will be docked at 20% per day, straight-line depreciation, excluding Saturday and Sunday and NOT excluding Statutory Holidays or other days of university closure. 5. You are responsible for all material on the course outline and will be tested on it whether or not it is included in lectures on unless I communicate in writing that it is excluded. 5

6 Tentative Course Schedule No. Topic Chapter/s 1. Introduction and scope of theory D 1 2. National Accounts D 1&2 3. Inflation, Unemployment, Interest rate, Exchange rate and GDP growth rate D 1&2 P 1&2 4. Classical Theory D 3, P 3 & F 3&4 5. The Simple Keynesian Expenditure Model D 10, P 5 &F 5 6. Hicks/Hansen Model, Good s Market Equilibrium D 11, P 6 & F 6 ( IS curve) Term test 1 7. Hicks/Hansen Model, Money Market Equilibrium D 11, P 21, F 6 8. Hicks/Hansen s Comparative Statics D 11, F 6 ( Equilibrium and disequilibrium) 9. Public Policy 1( Monetary and Fiscal Policy) D 12, P 7 & F Equilibrium in the open Economy with Fixed Prices D 13, 5, P 8, F 15 ( IS-LM- BP Model) Term test The Flexible Price Model ( AD/AS curves) D 6, 7 & 11(pp 225-7) F Public Policy in an open economy F 15 P 8 ( ) 6