Syllabus Proposal

Economics: Macroeconomics
Avi Ifergan
Contact Details:
ifergan@012.net.il or
0523 58 40 18
I welcome you to contact me on my cell phone any day of the week (except Shabbat), no
later than 10pm. The only thing that I ask is that you dont say: I apologize for contacting
you at home / on the weekend there is no apology necessary!
I am connected via e-mail 24 hours a day, six days a week at home and I will be glad to
answer your queries or messages. Please do not hesitate to contact me - I welcome
your interest or questions regarding my class.
Attendance: Three-strike policy - absence from more than 25 percent of the classes for
each semester results in automatic failure. If you arrive late to the class, it is your
responsibility to let me know at the end of class so that I can check off your name.
Participation: Your quality participation and input in this class is both valued and
essential! I expect you to devote your full attention to the lecture and discussions in this
class, which means that reading other materials, playing on a palm pilot or conducting
private conversations during class is not acceptable. The open and free-flow of ideas
and debate is encouraged, in a respectful manner (This means not interrupting one
another and listening to each others ideas). Finally, students are not to begin closing
books or making other preparations to leave class until the class is dismissed.
It is expected that each student will have prepared for each day's class by completing
the daily reading(s) and/or outside-class assignment(s).
Assessment:
Class Attendance
3 in-class Mini-exams
Exam

10 %
30 %
60 %

The course text is:

PRINCIPLES OF ECONOMICS, N. Gregory Mankiw. third edition
South-Western Publishers

WEEK 1

February 13, 2006

MEASURING A NATION'S INCOME?

Defining Macroeconomics, and the difference between microeconomics

Understanding GDP, its components and how it is measured
Real and Nominal GDP and calculating the GDP deflator

Chapter 23

WEEK 2

February 20, 2006

MEASURING THE COST OF LIVING

Inflation, the Consumer Price Index and how they are calculated
Problems in measuring the Cost of Living
Substitution Bias, Introduction of new goods and unmeasured quality changes
Producer Price Index
Differences between the GDP Deflator and the CPI
Calculating Dollar amounts from different periods
Real and Nominal Interest Rates

Chapter 24

WEEK 3

February 27, 2006

UNEMPLOYMENT

Categories of Unemployment
Measuring Unemployment
Calculating the Unemployment Rate and Labor Force Participation Rate
Public Policy and Job Search
The Minimum Wage, Unions and Colelctive Bargaining
Theory of Efficiency Wages

Chapter 28

WEEK 4

March 6, 2006
THE MONETARY SYSTEM

The Meaning of Money and its functions

M1 & M2
The Federal Reserve System
Banks and the Money Supply
Reserve Ratios and the Money Multiplier
Tools of Monetary Control

Chapter 29

Mini-Exam#1 20 Multiple Choice Questions on Chapters 23,24,28 (10%)

WEEK 5

March 13, 2006

MONEY GROWTH AND INFLATION

The Classic Theory of Inflation

Hyperinflation and deflation
Money Supply, Demands and Equilibrium
The Quantity Theory of Money
The Velocity of Money
Inflation Tax
Fisher Effect
Shoeleather costs and Menu costs

Chapter 30

WEEK 6

March 20, 2006

OPEN ECONOMY MACROECONOMICS: BASIC CONCEPTS

The difference between Open and Closed Economies

Exports, Imports and Net Exports
Net Capital Outflow
Savings, Investments and the relationship to International Flows
Nominal & Real Exchange Rates
Purchasing Power Parity Theory and Arbitrage

Chapter 31

WEEK 7

March 27, 2006

MACROECONOMIC THEORY OF THE OPEN ECONOMY

The difference between Open and Closed Economies

The Market for Loanable Funds
Real Equilibrium in an Open Economy
The Effect of Tariffs and Import Quotas on the Exchange rate
The Effects of Capital Flight

Chapter 32

Mini-Exam#2 20 Multiple Choice Questions on Chapters 29,30,31 (10%)

Pesach Break March 30 April 23
WEEK 8

April 24, 2006

AGGREGATE DEMAND & AGGREGATE SUPPLY

- Recessions, Depressions
- The basic model of aggregate demand and aggregate supply
- The Wealth Effect, The Interest Rate Effect, The Exchange Rate Effect
- Misperceptions Theory, Sticky-Wage Theory, Sticky-Price Theory
- Stagflation
- Policy Responses to Recession
Chapter 33

WEEK 9

May 1, 2006
THE INFLUENCE OF MONETARY AND FISCAL POLICY
ON AGGREGATE DEMAND

The Theory of Liquidity Preference

The Crowding and Multiplier Effect
Automatic Stabilizers

Chapter 34

WEEK 10

May 8, 2006

THE SHORT-TERM TRADEOFF BETWEEN INFLATION & UNEMPLOYMENT

-

The Phillips Curve

Expectations and the Short-run Phillips Curve
Natural Rate Hypothesis
The role of supply shocks
The cost of reducing inflation and the Sacrifice Ration
The Volcker Disinflation and the Greenspan Era

Chapter 35

Mini-Exam#3 - 20 Multiple Choice Questions on Chapters 32,33,34 (10%)

May 15 No Classes
WEEK 11

May 22, 2006

PRODUCTION & GROWTH

The factors of production

The production function
Government policies that raise productivity and living standards
The Importance of savings and investments
Diminishing Returns and the Catch-Up Effect
Education and the Brain-Drain

Chapter 25

WEEK 12

May 29, 2006

CURRENT ISSUES IN MACROECONOMICS

1.
2.
3.
4.
5.

Should monetary and fiscal policymakers try to stabilize the economy?

Should monetary policy be made by rule rather than by discretion?
Should the central bank aim for zero inflation?
Should the government balance its budget?
Should the tax laws be reformed to encourage saving?

Chapter 36