Intermediate Macroeconomics - DOC

							Introduction to Macroeconomics Fall 2007 -- ECON 10202 -- Wednesdays Dr. Philip J. McLewin Professor of Economics

Learning Activities: Before and During Class
Last Updated: Dec 6

Section 1: Economic Activity in Context
Week Date Learning Activities – Before Class Session Learning Activities – During Class Session

1 Sep 5 8am to 9:30

Topic: What’s The Learning Environment?  Read course outline & schedule on course web page  http://phobos.ramapo.edu/~pmclewin/PM_F0 7/macrointro07.htm

1 Sep 5 Topic: Economic Activity in Context [before class] 9:45  Read: Chapter 1 to 11:15

Topic: What’s The Learning Environment?  Course overview –- we can’t cover everything  Introductions -- Two step interview  Course descriptions -- think share pairs  Roundtable: “What’s the economy for, anyway?”  Pre-test on economic knowledge [not graded]  Minute essay Topic: Economic Activity in Context [during class]  Lecture: What is macroeconomics about?  Lecture/discussion: What are macroeconomic goals? o Colbert clip: What macro goals does this clip illustrate? http://www.comedycentral.com/motherload/?lnk=v&ml _video=90626 [Evan Osnos and the cashmere toilet seat] [Think-share-pair] o Clicker demonstration

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Learning Activities – DURING class

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Lecture: Classical vs. Keynesian economics o The Bozo Demonstration”

2 Sep 12

Topic: Putting Useful Tools to Use [REVISED]  Read Chapter 2  After reading Chapter 2, go back to Chapter 1 8am to identify sections or topics where the to authors used tools for understanding 9:30 (“empirical,” “theoretical,” and “historical”). o Write up your findings  Read: Paul Krugman, “A Socialist Plot,” NYT, August 27, 2007  Watch the “flash movie” on the Circular Flow [introduced on page 2-20]: http://www.fgn.unisg.ch/eurmacro/tutor/circul arflow.html o How might government fit in? 2 Sep Topic: What Do Economies Do?[Revised 9/6] 12  Read Chapter 3  What has happened to U.S. income inequality 9:45 since you were born? See: to  http://www.census.gov/hhes/www/income/his 11:15 tinc/h02h.html o Construct & compare Lorenz curves for your birth year with today (2006). o If you can’t figure it out, just bring in the raw data  Other kinds of inequalities -- recommended: “The State of the Dream 2004, Enduring Disparities in Black and White.” http://www.faireconomy.org/press/2004/State oftheDream2004.pdf

Topic: Putting Useful Tools to Use [REVISED]  Roundtable: What sections or topics from Chapter 1 did you associate with the “tools for understanding”?  Lecture: the PPF & opportunity costs o No fault exam with clickers  Lecture: the role of markets – advantages & limits o The Circular Flow o Exercise: “The Dreaded Disease” (opportunity costs & the markets)  Critical incidents essay [time permitting]

Topic: What Do Economies Do? [Revised 9/6]  Lecture: the four essential economic activities – adding finance  Discussion: Why is the USA economy called “Capitalism”?  Lecture: Who gets what?  Pair Check – The Lorenz Curve o A. What would a Lorenz Curve look like with complete equality in the distribution of income? o B. What if the bottom 99% of households had 5% of income, and the richest 1% had the rest? o What did you find out about income distribution since you were born?  What might explain this?  Lecture: three spheres of economic activity  Discussion of Exam 1 [part of test taken as a group]  No fault exam with clickers  Discussion: Reactions to “State of the Dream” reading?

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Learning Activities – DURING class

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3 Sep 19 8am

3 Sep 19 9:45

Topic: Supply & Demand – All it takes is being a parrot  Read Chapter 4 [treat Section 2 on “supply” lightly; skip “substitute” & “complementary goods,” skip 4.3 all together]  Bring in brief essay describing the “sub-prime mortgage” crisis of the Summer 2007, linking it to this chapter.  Recommended: Practice “shifting demand” at http://nova.umuc.edu/~black/ec00.html NOTE: BEGINNING OF SECTION 2 [Revised Sept 10] Topic: What’s behind all those numbers?  Read Chapter 5, Sections 1-4, note how capital stocks are treated, and focus on the “spending approach” to calculating GDP (Sec 4.2)

Topic: Supply & Demand – All it takes is being a parrot Lecture: Theory of demand; theory of market adjustment o Any e-Bay stories? o Team work: review questions & exercises (TBD)  Lecture/discussion: What does the sub-prime mortgage crisis tell us about the dynamics of real world markets?  No fault  Who wants to join a study group?  Critical incidents essay Topic: What’s behind all those numbers?  Lecture: o NIPA & their conventions o GDP o Clicker on Discussion Question 3.1  Team work: GDP exercise 

Section 2. Macroeconomic Measurement – How do we know what’s going on?
Week Date Learning Activities – Before Class Session Learning Activities – In Class

4 Sep 26 8am 4 Sep 26

Activity: Prepare for Exam 1  Review Chapters 1 – 4  Review other readings  Review class notes  Form study groups Topic: What’s behind all those numbers? [Revised]  Read Chapter 5, Sections 5-7  Go to the BEA web page to discover what

Exam on Section 1

Topic: What’s behind all those numbers?  Lecture: Dealing with price changes o Real GDP

Learning Activities – BEFORE class

Learning Activities – DURING class

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9:45

“current dollar GDP” and “real GDP” were the year one of your parents was born. Also find out what they are today. Briefly describe what you find.

5 Oct 3 8am

Topic: Well-being & Employment  Read Chapter 6, Sections 1, 2 (Introduction only), & 4 o Recommended: compact summary of GPI -- http://dieoff.org/page11.htm  Read Chapter 7, Sections 1 & 2.  Reflective essay on Section 1 of course: What did I learn and how did I learn best?

5 Oct 3 9:45

Topic: Well-being & Employment [revised]  Read: Chapter 7, Sections 3 & 4

o CPI Team Work: Calculating real GDP No fault Lecture in anticipation of theory part of course o S = I [Section 6] o Y = C + I + G + NX [Section 7]  Round Robin -- Jeopardy answer: “For the majority of the world’s population this, more than anything else, determines what one’s standard of living will be.” o Jeopardy answer: “What is …..” Topic: Well-being & Employment  Jigsaw: Environmental & social dimensions of measurement o The GPI o No fault quiz  Concept map: o Demonstration of concept map o Team project, create a concept map to answer the question: “What are the costs of unemployment?”  Lecture: Measuring employment & unemployment o Exercise: Calculating the unemployment rate Topic: Well-being & Employment  Lecture: What causes unemployment? o No fault quiz  Three-Step Interview: What qualities do you want from your career job?  Forming study groups  Minute essay    Topic: Ways of thinking [Classical School]  Lecture: Complete discussion of “theories of employment”  Lecture: The Business Cycle o No fault quiz  Lecture: Macro-modeling and aggregate demand

6 Oct 10 8am

NOTE: START OF SECTION 3 Topic: Ways of thinking [Classical School] REVISED  Read Chapter 9, Sections 1 & 2

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Learning Activities – DURING class

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6 Oct 10 9:45

Topic: Ways of thinking [Keynesian School] REVISED Oct 8.  Read Chapter 9, through Section 3.3 (to page 26)  Bring in: Drawing of an airplane [it can be simple]; two images of “antipasto” and “postmortem”

o The Leakage/Injection approach o The Classical solution to leakages  Demonstration: “The wip” Topic: Ways of thinking [Keynesian School]  Lecture: Introduction to the Keynesian Model  Critical incidents essay

Section 3 – Conceptual Views of the Economy – how do we explain or tell convincing stories about the performance of the macroeconomy? Policy Debates -- what, if anything, should be done to affect the macroeconomy?

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Oct 17 8am

Activity: Prepare for Exam 2  Review Chapters 5 - 8  Review other readings  Review class notes  Form study groups Topic: Part II – Ways of thinking [Keynesian School]  Read Chapter 9, Section 3.1 to 3.6 [Revised slightly]  Search the internet (or a library database) for a news story on “consumption” or “consumer spending,” or some variation with a macroeconomic focus. Write up: What is the main point? Cite source. Topic: Part III – Ways of thinking [Keynesian School, continued]

Exam on Section 2

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Oct 17 9:45

Topic: Part II – Ways of thinking [Keynesian School]     Lecture: The Keynesian Model & aggregate demand Share-pair: news items on consumption spending Team work: complete Exercise 3 (page 9-36) No fault quiz

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Oct 24

Topic: Part III – Ways of thinking [Keynesian School, continued]

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Learning Activities – DURING class

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Read Chapter 9, 3.7 to end Reflective essay: What did I learn in Part 2 of the course and how did I learn best? Read AmosWEB, Fact 7, Our Circular World, with special attention to the section “The Multiplicative, Cumulatively Reinforcing Interaction of the Circular Flow (Whew!)” http://www.amosweb.com/cgibin/awb_nav.pl?s=pdg&c=dsp&k=7 Can you find a video clip demonstrating the concept of the multiplier? Not so much a prof’s lecture on line, but something commonplace. [Ever see the Abbott & Costello bit on mustard?

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Lecture: Multiplier and the problem of persistent unemployment Think-share-pair: “Fact 7” article Viewing video clips (hopefully something appropriate will be found) o Abbott & Costello “Mean Mr. Mustard” http://www.youtube.com/watch?v=CVyoYXw3TuI Buzz Group: How does Classical economics compare to Keynesian economics? No fault quiz

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Oct 24 9:45

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Oct 31 8am

Topic: Part IV – Ways of thinking [Edited]  Complete Exercise 6 [pg 9-37]  Link to the “Simple Macro-Model” (Number 7) at: http://nova.umuc.edu/~black/pageg.html o Experiment with changing government expenditures in the “Alternative Scenario” then, separately, taxes. o Print the results, describe what happened and interpret why it happened. By how much did income (Y) change as a result of changes in “G” and “T”?. Topic: What to do? – Fiscal Policy [Slight revision]  Read Chapter 10 [skim: tax multiplier & balanced budget multiplier (pg 10-7) and

Topic: Part IV – Ways of thinking  Share-Quad: o Going over Exercise 6 o Simple macro-model experiments  Demonstration: The “FairModel,” an on-line “realistic” econometric model to forecast future U.S. economic performance -- http://fairmodel.econ.yale.edu/

Topic: What to do? – Fiscal Policy  Lecture: o Adding government to ways of thinking o Fiscal policy & its limits

Learning Activities – BEFORE class

Learning Activities – DURING class

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Oct 31 9:45

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Section 2.4] Read the FairModel tutorial on the course website: o Use the model to predict what will happen if federal government expenditures [COG] increase. o What happened to GDP and the unemployment rate? What of consumption & investment measures? o What’s your interpretation of why it happened? Use the “Keynesian Cross” graph and model.  Read and bring in copy of “Government Debt – The Greatest Threat to National Security,” by Ron Paul, a Texas Congressman. http://www.house.gov/paul/tst/tst2004/tst10 2504.htm [no written response req’d]  Check out the U.S. National Debt Clock: http://www.brillig.com/debt_clock/ Topic: What is money? [Slight revision]  Read Chapter 11, Sections 1 & 2  Fowler & Qin, “QQ: China’s New Coin of the Realm?,” WSJ, March 30, 2007 o What does QQ teach us about the nature of money?  Michael Wines, “Anti-inflation Curbs on Prices Creates Havoc for Zimbabwe,” NYT, July 4, 2007 [on web site] o What are the effects of “hyperinflation”? Topic: What’s the role of the banking system? 

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o Automatic stabilizers o No fault Round robin: What are you FairModel results? How do you interpret them? Think-share-pair: Is Ron Paul right? “Government Debt – The Greatest Threat to National Security,” by Ron Paul, a Texas Congressman. Lecture: The international sector No fault

Topic: What is money?  Lecture: Why money and what is it? o Share/pair: What does “QQ” teach us about the nature of money? o Discussion: What does Zimbabwe teach us about hyper-inflation?  Buzz Session: Who gains and who loses with modest price inflation (near the acceptable target range)?  No fault Topic: What’s the role of the banking system?

Learning Activities – BEFORE class

Learning Activities – DURING class

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7 8am

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Read Chapter 11, Section 3

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Greg Ip, “Bernanke, in First Crisis, Rewrites Fed,” WSJ, Oct 31 2007
o Hand in page 1 of the article [so I know you downloaded it] with your reaction to the entire article.

Lecture: The secrets of the temple (on the Federal Reserve System & the creation of money and credit) Team Exercise: “Monetary Policy – Step by Step” No fault Demonstration: Changing monetary variables in the FairModel Minute essay: what questions do you still have about the role of the FED?

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Nov 7 9:45

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Nov 14 8am Nov 14 9:45

Topic: How does money affect AD?  Read Chapter 11, Section 4  Use the FairModel to predict what will happen to output [GDPR], the employment rate [UR], and price inflation [PCGDPD*] if interest rates [RS] are changed. Interpret your results in a lab report. o PCGDPD = *% change in the implicit price deflator Topic: Part V – Ways of Thinking [Revised]  Read Chapter 11, Section 6 [Omit Section 5] Topic: Review Ways of Macroeconomic Thinking  Study “Preparation Guide” questions o All or part of it will be posted to the web site by the early evening of Nov 8. Thanksgiving Break

Topic: How does money affect AD?  Lecture: Money, interest rates & aggregate demand o Group: Share your FairModel results  Quad-pairs: Complete exercise Question 3, page 11-32 o How does this clarify the FED’s response to the “subprime” panic?  No fault Topic: Part V – Ways of Thinking  Lecture/discussion on Ch 11, Sections 4 & 6  No fault; exercise on the FED Topic: Review Ways of Macroeconomic Thinking  Open questions  Groups assigned to specific chapters to answer questions on Preparation Guide  Team Matrix: comparing & contrasting Keynesian & classical economics [time permitting] Thanksgiving Break

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Nov 21 Nov 28

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Activity: Prepare for Exam 3  Review Chapters 9-11  Review other readings

Exam on Section 3

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Learning Activities – DURING class

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8am Nov 28 9:45 Dec 5 8am

 Review class notes Minor revisions below Topic: Putting it All Together [ADE/ASR Model]  Read Chapter 12, Sections 1 & 2 Topic: Putting the model to work  Read Chapter 12, Section 3  Reflective essay: What did I learn and how did I learn best? Topic: Two Views -- Classical vs. Keynesian  Read Chapter 12, Section 4 [omit Section 5] Topic: Two Views, con’t; Review  Read Feldstein, “How to Avert Recession” as review for final exam. See Preparation Guide 5, Section V, question 3. Outline some preliminary thoughts as WIP. Activity: Prepare for make-up exam  Review Chapter 12  Review other readings  Review class notes Prepare for Final Examination  Coverage is comprehensive, but will concentrate on Section 3 of the course

Topic: Putting it All Together [ADE/ASR Model]  Lecture: Demand & Supply  No fault: Exercise 1 (pg 12-32) Topic: Putting the model to work  Lecture: ADE/ASR con’t  Lecture: Recessionary times & inflationary times  Quad exercises: U.S. economic history with AD/AS  No fault Topic: Two Views -- Classical vs. Keynesian  Lecture: Competing theories – what is the shape of the ASR?  Team work: Classical vs. Keynesian economics matrix Topic: Two Views, con’t; Review  Lecture on Classical & Keynesian approaches  Group discussion of Feldstein’s article  Review for make-up & final examination

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Dec 5 9:45 Dec 12 8am

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Dec 12 9:45 Dec 19

Make-up Exam #4
 Optional exam to replace lowest score on an earlier exam

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Final Examination [8:30 to 10:30]