Course Syllabus, 2013/14
Syllabus
Course
Syllabus, 2014/15
Course Syllabus 2014/15
MICRO and MACRO ECONOMICS
Lucky you. You are about to embark on a yearlong course in
economic that is probably the most important, and certainly the most pervasive,
social science in the modern world. Micro and macroeconomics seem to touch most
things these days, and an understanding of them is part of the background for
understanding much of what goes on around you. To further encourage this
understanding, economic current events will be a weekly part of the course and
your evaluations.
Not only is economics significant but you are also going to
learn a heck of a lot in this course. We will start with microeconomics, which
deals with economic problems that you, the individual, face or your household
confronts or that individual business enterprises deal with every day. We will
then move to macroeconomics, which looks at economic problems in the
“aggregate” or in large numbers. This part of the course will help you
understand our nation’s economic policy and will introduce you to different
economic philosophies. And speaking of philosophy, one of the wonderful things
about economics is that we will be able to talk about a lot of abstract,
philosophical issues but use very practical, down-to-earth examples to
illustrate them. Economics lends itself to going from the practical to the philosophical
and back again. It’s a wonderful way to enliven the practical and test the
abstract.
There is an extensive Lecture Series by distinguished economists
and other experts that is an important supplement to the course. There will often
be a short reading as part of the preparation to hear these talks, and these
readings as well as what the speakers say will frequently be the basis for
questions on your evaluations. The topics of the talks will usually not be
related to what we are doing in class but are of timeless importance to
you—like value investing—or are relevant to issues that are being hotly debated
now—such as quantitative easing, bank regulation, ObamaCare or the plight of
the middle class. The lecture series is also a wonderful opportunity for you to
hear other adult voices in the classroom who are experts in their fields. Most
of the lectures will take place during the class periods, but occasionally they
will be held in Judd 126 during the Thursday Assembly period.
FIELD TRIP
We will be taking a Field Trip in the winter quarter to the
Board of Trade. I am not trying to make you commodities traders but the open
outcry system is slipping into history and I want you to be able to tell your
grandchildren that you witnessed it. They will think that you are VERY OLD when
you tell them you saw men and women trading by screaming and shouting in a pit.
We will also visit the Federal Reserve Bank across the street from the Board,
and the Chicago Board Options Exchange where I used to trade. At the Federal
Reserve, we will hear one of their economists, Rick Matoon, speak on the state
of the US economy.
Quizzes and Tests:
David Colander, the author of your text, is fond of saying that
one of the things you learn in economics is that there is no such thing as a
free lunch. So what are the costs of this course? There is one I can think of—a
lot of hard work. This is the sort of course that you have to pay attention to
on a daily basis. And, every day in class we will be learning something new
that you will have to make an effort to understand and then remember because
there will be many little quizzes.
These quizzes will also ask you to recall key graphs, equations,
and ideas from the chapter. Short answer questions will also be taken
from the lectures we have heard from outside speakers and from current events
articles we have read. You will also be quizzed closely on the chapters from Naked
Economics by Charles Wheelan and The Outliers by Malcohm Gladwell.
We will often read chapters from these books when they are relevant to
what we are doing in Colander.
Quizzes will be held frequently: usually every full week. For
each quarter, your lowest quiz score will not count toward your final grade.
The good news about having lot of little quizzes is that you
will not have a big test until the end of December: the fall quarter final,
which will consist of questions from all the quizzes you have taken up to that
point in the year. At the end of the year there will be two big tests: a
final in macroeconomics (again consisting of questions from the macro quizzes)
and the AP exams in both micro and macro. If you wish to take the AP exams, I
frankly encourage you to take only one because they are both on the same
day. I recommend the micro exam since we will spend more time on it than
macro. I would also recommend that only those students who have done well in
the course, AND WHO ARE WILLING TO STUDY FOR THE AP EXAM, sign up to take one
or more of the AP exams.
The macro and the micro course finals will be the
equivalent of four weekly quizzes when calculating your grade. If you get a 4
or a 5 on the AP exam, you will receive an “A” in the course. If you take both
AP exams you must average a 4 to receive your “A”.
Student Participation and Facilitating:
One last piece of the evaluation puzzle is class participation.
It will be important. If you just sit there, I reserve the right to lower grade
a full letter. Active participation that is constructive will certainly improve
your grade. DISRUPTIVE BEHAVIOR that impedes the smooth running of the class
can, again, lower your grade by a full letter. A more formal aspect of class
participation is that the discussion of most of the chapters in Colander will
be facilitated by one of you. You will be graded on your ability to lead a
discussion. A detailed rubric for discussion leadership evaluation can be found
in the "categories" section under "facilitator criteria."
We will also select an observer to formally comment on the discussion, as is done
in the Harkness method that is used at Exeter.
Criteria for evaluating facilitators:
1. Do you lead the
discussion by asking thoughtful questions rather than lecturing students on
what is in the reading?
2. Are you capable of answering the questions that you
ask and those that the students ask?
3. Do you involve most of the students in
the class or just a few eager ones?
4. Are key graphs drawn on the board or
screen by you or your peers and are properly labeled?
Grading of Criteria:
1.
A “C” is a poor lecture.
2. A “B-“ is a good lecture.
3. A “B” is good
questions but no real command of the material.
4. A “B+” is good questions
that you know the answers to, however, you have difficulty answering questions
that students raise.
5. An “A-“ is good questions with good command of the
material but poor board or screen work.
6. An “A” is good questions, good
command of the material, and good board or screen work.
Research Paper: Value Investing:
During the autumn quarter I would like you to write a “story”
(in Peter Lynch’s use of the term) about a stock that you would like to invest
in. Your paper reflect Lynch’s philosophy of value investing, should be a
minimum of three pages and a maximum of five excluding appendices. You should
begin this paper by writing a paragraph explaining the philosophy of value
investing. You should then cite the stock you have invested in and explain why
you have chosen this stock and this sector at this moment in time. You should
have consulted at least three or four sources in making your choice. Those
sources should include the annual report of the company, Value Line, and
perhaps the Morningstar website. I would include some of the material you
looked at in your appendices. You should answer the following questions in your
paper: Why do you want to invest in the company’s product(s)? What is the
company’s position in the industry? How financially healthy is the company?
What is the management of the company like? How healthy is the company for the
long term? How expensive is the stock? These questions should help you write
the STORY of your company that will form the rationale for you buying and
selling the stock. You should make every effort to actually invest a small
amount of money in the stock of your choice. You don’t have the money? Hey,
what are grandparents for anyway?! The last day that this paper can be handed
in is Friday, December 6.
You will also be asked to write a behavioral research paper in
the winter quarter based on the kind of experiments that you will read about in
the Dan Ariely book, and a paper in the spring quarter where you will choose a
macro economic topic.
Point Distribution for Fall Quarter:
Quizzes: 50 points each (probable number of quizzes for the
quarter is 10)
Research Paper: 150 points
Discussion Facilitation: 100 points
Microeconomics Final: 200 points
* Other graded assignments may be given at the discretion of the
instructor.
BOOKS AND NOTEBOOKS:
Characteristic of most good students is their ability to take
good notes and highlight the required reading, bring the proper books to class,
and just generally be organized. I want to encourage these tendencies in all of
you. Therefore, you are expected to bring your textbook and economics notebook
to class each day.
The texts you are expected to purchase for this course from the
MBS bookstore are the latest editions of David Colander’s Economics (the
paperback versions of Micro and Macro), Charles Wheelan’s Naked
Economics and Dan Ariely’s Predictably Irrational. The Charles
Wheelan book goes over much of what is in Colander without the math or the
graphs and in a very readable fashion. One of my former students who is at
Harvard recently told me that they use Naked Economics in their
introductory course. Dan Ariely’s book is one of many exciting texts that is
being produced in the increasingly important field of behavioral economics.
The course will end for seniors with the beginning of May
Project, however, juniors taking the course will continue to meet and we will
read current events and you may do special projects of your choosing.
TIME TABLE FOR THE YEAR BASED ON COLANDER’S CHAPTERS:
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Week
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Chapter Assignment
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8-Sep
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CH 1: Economics and Economic Reasoning
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15-Sep
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CH 2: The Production Possibility Model, Trade, and
Globalization
CH 3: Economic Institutions
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22-Sep
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CH 4: Supply and Demand
CH 5: Using Supply and Demand
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29-Sep
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CH 6: Describing Supply and Demand: Elasticities
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6-Oct
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CH 7: Taxation and Government Intervention
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13-Oct
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CH 8: Market Failure versus Government Failure
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20-Oct
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CH 9: Comparative Advantage, Exchange Rates, and Globalization
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27-Oct
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CH 10: International Trade Policy
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3-Nov
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CH 11: Production and Cost Analysis 1
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10-Nov
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CH 12: Production and Cost Analysis 11
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17-Nov
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CH 13: Perfect Competition
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24-Nov
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CH 14:Monopoly and Monopolistic Competition
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1-Dec
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CH 15: Oligopoly and Anti -Trust Policy
CH 16: Real World Competition and Technology
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8-Dec
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CH 17: Work and Labor Markets
CH 18: Who Gets What? The Distribution of Income.
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15-Dec
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Fall Final Exam
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22-Dec Winter Break
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29-Dec Winter Break
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5-Jan CH 20: Game Theory, Strategic Decision Making, and
Behavioral Economics
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CH 22: Behavioral Economics and Modern Economic Policy
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12-Jan
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CH 6: Economic Growth, Business Cycles, and Structural
Stagnation
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19-Jan
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CH 7: Measuring the Aggregate Economy
CH 9: The Short-Run Keynesian Policy Model: Demand-Side
Policies
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26-Jan
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CH 10: The Classical Long-Run Policy Model: Growth , and
Supply Side Policies
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2-Feb
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CH 11: The Structural StagnationPolicy Dilemma
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9-Feb
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CH 12: The Financial Sector and the Economy
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16-Feb
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CH 13: Monetary Policy
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23-Feb
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CH 14: Financial Crises, Panics and Unconventional Monetary
Policy
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2-Mar
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CH 15: Debts and Deficits
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9-Mar
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CH 16: The Fiscal Policy Dilemma
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23-Mar Spring Break
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30-Mar
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CH 17: Jobs and Unemployment
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6-Apr
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CH 18: Inflation, Deflation and Macro Policy
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143Apr
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CH 20: International Financial Policy
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20-Apr
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CH 22: Macro Policy in Developing Countries
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27-Apr
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Spring Final Exam
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We will then review for a two-day Macro Final. One day of the
test will be devoted to objective questions from the universe of questions you
have been asked during the year. Another day will focus on graphs and short
answers.
The course ends with the commencement of May Projects.
A SELECTION OF SOME OF THE KEY CONCEPTS BY CHAPTER IN COLANDER.
Make sure you understand these ideas in studying for evaluations
on these chapters.
CHAPTER 1: “Economics and Economic Reasoning:”
1.
2.Scarcity
3.
4.Marginal Cost
5.
6.Sunk Cost
7.
8.Economic Decision Rule
9.
10.
TINSTAAFL—there is no free lunch
11.
12.
Opportunity Cost
13.
14.
Invisible Hand
Chapter 2:”The Production Possibility Model, Trade, and
Globalization.”
1.
2.Production Possibility
Table and Curve: what the latter demonstrates, its shape, shifts, and points
in, out and on the curve
3.
4.Comparative Advantage
5.
6.Principle of
increasing marginal opportunity cost
7.
8.Productive efficiency
9.
10.
Efficiency
11.
12.
Externality
13.
14.
Public Good
8. Free Rider
Chapter 3: “Economic Institutions.”
1.
2.Fairness
3.
4.Circular Flow of a
Market Economy
5.
6.Factor Market
7.
8.Goods Market
9.
10.
Limited Liability
11.
12.
Globalization
Chapter 4: “Supply and Demand:”
1.
2.Demand
3.
4.Law of Demand
5.
6.Demand
7.
8.Quantity Demanded
9.
10.
Movement along a demand curve and shifts in it
11.
12.
Normal goods
13.
14.
Inferior goods
15.
16.
Substitute
17.
18.
Law of Supply
19.
20.
Supply curve
21.
22.
Supply
1.
2.Quantity Supplied
3.
4.Movement along a
supply curve and shifts in the supply curve
5.
6.Equilibrium
Chapter 5: Using Supply and Demand:”
1.
2.Sticky Prices
3.
4.Diagram of Shifts of
Demand and Supply on Price and Quantity
5.
6.Price Ceilings—Rent
Control
7.
8.Price Floor-Minimum
Wage Laws
9.
10.
Excise Tax
6. Tariff
Chapter 6: "Describing Supply and Demand Elasticities"
1.
2.Price Elasticity of
Demand and Supply
3.
4.What Price Elasticity
Provides
5.
6.Endpoint Problem
7.
8.Elasticities:perfectly
elastic, elastic, unit elastic, perfectly inelastic, and inelastic
9.
10.
Income Elasticity of Demand
11.
12.
Cross Price Elasticity of Demand
Chapter 7: “Taxation and Government Intervention"
1.
2.Consumer and Producer
Surplus
3.
4.Taxes, their costs,
benefits and relative burden
5.
6.Deadweight Loss
7.
8.Welfare Loss Triangle
9.
10.
Price Ceilings and Floors and their relationship to taxes and
producer and consumer surplus
Chapter 8: "Market Failure versus Government Failure"
1.
2.Market Failure
2. Negative Externality
3. Positive Externality
4. Sources of Market Failure
5. Pareto Optimal
6. Efficient and Inefficient
7. Tax Incentives
8. Effluent Fees
9. Market Incentive Plan
10. Free Rider Problem
11.Optimal Policy
12. Public Good
13. Adverse Selection Problem
14. Government Failure
Chapter 9: “Comparative Advantage, Exchange Rates and
Globalization"
1.
2.Comparative Advantage
3.
4.Inherent and
Transferable Comparative Advantage
5.
6.The Law of One Price
7.
8.Tariffs and Quotas
9.
10.
Embargoes
11.
12.
Regulatory Trade Restrictions
13.
14.
Learning by Doing
15.
16.
Economies of Scale
Chapter 10: “International Trade Policy"
1.
2.Economics of Scale
3.
4.Embargoes
5.
6.Tariffs
7.
8.Quotas
9.
10.
Learning by Doing
11.
12.
GATT
13.
14.
WTO
15.
16.
Strategic Bargaining
1.
Chapter 11: “Production and Cost Analysis 1:”
1.
2.Production
3.
4.Firm
5.
6.Accounting Profit
7.
8.Economic Profit
9.
10.
Difference between and Short-run and Long-run decision
11.
12.
Production Table
13.
14.
Marginal Product
15.
16.
Average Product
17.
18.
Production Function
10. Law of Diminishing Marginal Productivity
11.Fixed Costs
1.
2.Variable Costs
3.
4.Average Costs
5.
6.Average Fixed Costs
12.Average Variable Costs
1.
2.Marginal Cost
3.
4.The Relationship
between Productivity and Costs
5.
6.The Relationship
between Marginal and Average Total Cost
Chapter 13: “Production and Cost Analysis II:”
1.
2.Economies of Scale
3.
4.Indivisible Setup
Costs
5.
6.Minimum Efficient
Level of Production
7.
8.Diseconomies of Scale
9.
10.
Envelope Relationship
Chapter 13: “Perfect Competition:”
1.
2.Conditions for Perfect
Competition
3.
4.Market Demand Curve
and Individual Firm Demand Curve
3.
5.
6.Marginal Cost,
Marginal Revenue and Price
7.
8.The Marginal Cost
Curve is a Firm’s Supply Curve
9.
10.
Determination of Profits by Total Cost and Total Revenue Curves
11.
12.
Determining Profits Graphically
13.
14.
Shutdown Point
15.
16.
Normal Profits
Chapter 14: “Monopoly and "Monopolistic Competition"
1.
2.Monopoly
3.
4.Determining the
Monopolistic Price and Output Graphically
5.
6.Monopolistic Profit
and Loss Graphically
7.
8.The Welfare Loss from
Monopoly though not in a Natural Monopoly
9.
10.
Barriers to Entry
11.
12.
A Natural Monopoly
7. Monopolistic Competition and its
Characteristics
Chapter 15 "Oligopoly and Anti-Trust Policy"
1.
2.Market Structure
3.
4.Oligopoly and its
Characteristics
5.
6.North American
Industry Classification System (NAICS)
7.
8.Concentration Ratio
9.
10.
Herfindahl Index
11.
12.
Strategic Decision Making
13.
14.
No single model of Oligopoly exists
15.
16.
Cartel Model
10. Contestable Market Model
11.The Kinked Demand Curve
Chapter 16 “Real World Competition and Technology"
1.
2.Incentive-Compatible
Contract
3.
4.Lazy Monopolist
5.
6.Network Externality
Chapter 17: “Work and the Labor Market:”
1.
2.Substitution Effect
3.
4.Income Effect
5.
6.Derived Demand
7.
8.Monopsony
9.
10.
Downsizing
11.
12.
Outsourcing
13.
14.
Efficiency Wages
15.
16.
Comparable Worth Laws
Chapter 18: “Who Gets What? The Distribution of Income.”
1.
2.Lorenz Curve
3.
4.Poverty: Relative and
Absolute
5.
6.Poverty Threshold
7.
8.Changes in the Class
System
9.
10.
Social Security
11.
12.
Medicare
1.
Chapter 20: "Game Theory, Strategic Decision Making and
Behavioral Exonomics
1.
2.Game Theory
2. The Prisoner's Dilemma
3. Payoff Matrix
4. Noncooperative Games
5. Nash equilibrium
6. Dominant Strategy
7. Sequential Games
8. Endowment Effects
9. Framing Effects
Chapter 22:
1. Coordination Mechanism
2. Shadow Prices
3. Incentive Compatibility Problem
4. Nudge
5. Libertarian Paternalism
Chapter 6–MACRO: “Economic Growth, Business Cycles,
Unemployment, and Inflation”
1.
2.GDP
3.
4.The different kinds of
unemployment
5.
6.The Target Rate of
Unemployment
7.
8.The Deflator
9.
10.
Okum’s Rule of Tumb
11.
12.
The different kinds of Indices
Chapter 8: “Measuring the Aggregate Economy”
1.
2.National Income
Accounting and its subaggregates
3.
4.Gross Domestic Product
5.
6.Gross National Product
7.
8.Value Added
9.
10.
Disposable Personal Income
11.
12.
Genuine Progress Indicator
Chapter 9: “The Short-Run Keynesian Policy Model: Demand-Side
Policies
1.
2.Monetary Policy
2. Potential Output
3. Equilibrium Output
4. Deflation
5. The Paradox of Thrift
6. The Multiplier Effect
7. The Recessionary Gap
8. Inflationary Gap
Chapter 10: "The Classical Long-Run policy Model: Growth
and Supply Side Policies."
1. Say's Law
2. Sources of Growth
3. Classical Growth Model
4. New Growth Theory
5. Rule of 72
1.
Chapter 11: "The Structural Stagnation Problem"
1. The Structural Stagnation Hypothesis
2. Secular Stagnation Theory
3. The Globalized AS/AD Model
4. The Value-added chain
5. Stagflation
1.
Chapter 12: “The Financial Sector and the Economy”
1.
2.Real Sector
3.
4.Financial Sector and
its Role
5.
6.Bonds and how their
price varies inversely with interest rates
7.
8.Functions of Money
9.
10.
Reserves and the Reserve Ratio
11.
12.
Simple Money Multiplier
13.
14.
Approximate Real-World Money Multiplier
Chapter 13: “Monetary Policy”
1.
2.The Effect of Monetary
Policy on the AS/AD MODEL
3.
4.Structure and Duties
of the Fed
5.
6.Tools of Monetary
Policy
7.
8.Fed Funds and Discount
Rate
9.
10.
Taylor Rule
11.
12.
Liquidity Trap
Chapter 14: “Financial Crises, Panics, and Unconventional
Monetary Policy"
1.
2.Bubble
3.
4.Leverage
5.
6.Extrapolative
Expectations
7.
8.Securitization
9.
10.
Derivatives
11.
12.
Black Swans
13.
14.
Quantitative Easing
15.
16.
Moral Hazard
9. Herding
10. Efficient Market Theory
11. Too Big to Fail
12. Quantitative Easing
Chapter 16: “Inflation and the Philips Curve”
1.
Chapter 15: “Deficits, and Debt”
1.
2.Structural Debt or
Surplus
3.
4.Passive Debt or
Surplus
5.
6.Nominal Deficit
7.
8.Real Deficit
9.
10.
Deficits and Debt relative to GDP
Chapter 16: “ The Fiscal Policy Dilemma”
1.
2.Crowding Out
3.
4.Problems with Fiscal
Policy
5.
6.Automatic Stablizer
Chapter 17:" Jobs and Unemployment"
1. The Unemployment Rate
2. Labor force participation rate
3. The employment-population ratio
4. Okam's Rule of Thumb
5. Cyclical Unemployment
6. Structural Unemployment
7. The Reservation Wage
Chapter 18: "Inflation, Deflation and Macro Policy"
1. Deflation
2. Quantity Theory of Money
3. Equation of Exchange
4. Feedback Rules
5. Institutional Theory of
Inflation
6. Insider/Outsider Model: Demand
Pull, Cost Inflation
7. Short and Long-Run Philips Curves
Chapter 20 “International Financial Policy”
1.
2.Balance of Payments
3.
4.Different Types of
Accounts
5.
6.Different Types of
Exchange Rates
1.
Chapter 22: “Macro Policies in Developing Countries”
1.
2.Convertibility
3.
4.Focal Points
5.
6.Takeoff
REVIEW MATERIAL FOR AP EXAMS:
For those of you who are intending to take one or more AP exams,
you will be given review material that is from the AP conferences that I have
attended and materials that have been created by students that have taken this
class before you. This material will consist of questions and examples from an
old AP exam with rubrics; the actual AP essay questions from 1989 through 2000
with answers created by former students; key graphs and equations in both micro
and macro; and micro and macro problem areas on past exams.
AP EXAMS:
Thursday, May 15: macro in the morning and micro in
the afternoon.
The Week of September 8
The eye opener of the week:
The chains of love are
never so binding as when the links are made of gold.
Royall Tyler
KEY DATE:
1. On the second class of next week (Day
#2 Week #2) you will have a QUIZ that will cover the work done up until
that time.
The quiz will be comprised of 20 short questions
and an essay. The essay prompt is as follows: What is economics?
CLASS ONE: The first order of business is to
introduce to the new Blog. Then the course syllabus will be passed out and I
will go over key portions of it. In particular I will explain the Exeter
Harkness Seminar method that will be used in this class. Please bring the
relevant text(s) to class every day. HOMEWORK: please read the
Freeland and Sorkin handouts.
CLASS TWO: We will discuss the reading and select a
facilitator and observer for tomorrow’s discussion. HOMEWORK: Read
chapter 1 (pages 4-19) in the Colander micro text and the forward and
introduction to Wheelan.
CLASS THREE: We will discuss the reading and select
a new facilitator and observer for tomorrow’s class. HOMEWORK: please read
chapter 2 in Colander.
CLASS FOUR: We will discuss the reading with a focus on the production
possibility curve and comparative advantage. A new facilitator and
observe with be chosen.
HOMEWORK: read the first chapter in Wheelan
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