Economics studies how rational people make choices trying to satisfy their unlimited wants with limited resources.  Macroeconomics studies how the economy operates. What determines prices of goods and services? Are we going not have another recession? Is budget deficit a problem? Who is in charge of interest rates? This course offers answers to these and many other questions. You will learn to think like an economist and to better understand current real world events.

Textbook:  Macroeconomics – OpenStax– free pdf.  A different textbook may be used with instructor’s approval. Supplemental Khan Academy video course: Macroeconomics

The Economy – core

Grades: HWs 50%, tests 30%, participation & presentation 20%

Course schedule, Readings, HWs

1.    Choices, costs & benefits, production possibilities (ch 1, 2)

• Scarcity & Choice – video
• Resources- video
• Micro vs Macro – video
• Graph review – video
• Models & Theories – video
• Opportunity Cost –  video
• What to Produce – PPF curve
• Individual PPC – video
• Society’s PPC – video
• Resource changes in PPC – video
• Opportunity cost – learn econ 8min explanation
• The Circular Flow Model of a Market Economy – video
• The Hockey Stick of Human Prosperity
• Division of Labor: Burgers and Ships
• How the Division of Knowledge Saved My Son’s Life
• Homework 1 – doc

2. Comparative advantage (ch 20)

• Comparative advantage – mruniversity
• Comparative advantage example solved – mruniversity
• Sources of Comparative Advantage – mruniversity
• Evidence on Comparative Advantage from Japan  -mruniversity
• Comparative advantage – video
• Trade, Prod Possibilities, & More Trade -example with countries
• Absolute and comparative advantage– from South Africa
• Why do countries restrict trade? – video
• Homework 2 – doc

3. How are prices, wages and interest rates determined? (ch 3)

• Watch ‘Supply and demand’ section of this course videos or videos below (they are similar)
• Market in simple terms
• Demand – youtube
• Change in Demand vs Change in Quantity Demanded – youtube
• Supply – youtube
• Market Equilibrium – youtube
• The Demand Curve
• The Supply Curve
• The Equilibrium Price
• A Deeper Look at the Demand Curve
• The Demand Curve Shifts
• A Deeper Look at the Supply Curve
• The Supply Curve Shifts
• Exploring Equilibrium
• Does the Equilibrium Model Work?
• Supply and Demand Terminology
• Markets in Kidneys: A Moral Case
• What Do Prices “Know” That You Don’t?– prices as signals
• Adam Smith: The Invisible Hand – learnliberty
• Homework 3– doc

4.  GDP: Total production and real income  (ch 6)

• GDP – video
• Real GDP – video
• Real income – video
• What is Gross Domestic Product ( GDP )? – mruniversity
• Nominal vs. Real GDP
• Real GDP Per Capita and the Standard of Living
• Splitting GDP
• Khan Academy on GDP and circular flow – video

• Business cycles – video
• Business Cycles Explained: Introduction  – learn liberty
• Economic growth – video
• GDP historical stats – source of data in HW4
• Homework 4 – doc

5.   Economic growth  (ch 7)

• Geography and Development, Trade -mruniversity
• The Effect of Geography on Institutions
• Geography and Development, Disease
• Education and economic growth
• Trust and economic growth
• Finance and Growth
• Roving and Stationary Bandits
• African Borders and Conflict
• Economic Freedom and Growth
• The Power of Property Rights
• Health and Wealth of Nations – in numbers, Gapminder
• CIA factbook  – compare countries by GDP, growth
• Homework 5 – doc

6.    Unemployment  (ch 8)  

• Defining the Unemployment Rate
• Is Unemployment Undercounted?
• Frictional Unemployment
• Structural Unemployment
• Cyclical Unemployment
• Labor Force Participation
• Taxing Work
• The Economics of Choosing the Right Career
• Unemployment – video
• Types of unemployment – video
• Unemployment Rates by state – BLS
• Occupational outlook from BLS  – find fastest growing  jobs
• Unemployment Rates -U5, U6 – with discouraged workers
• Homework 6 – doc

 7. Inflation  (ch 9)

• Inflation and price indexes – video
• Measuring cost of living –inflation and the consumer price index
• Real and nominal return
• Deflation
• Zimbabwe and Hyperinflation: Who Wants to Be a Trillionaire?
• Measuring Inflation
• Quantity Theory of Money
• Causes of Inflation
• Costs of Inflation: Price Confusion and Money Illusion
• Costs of Inflation: Financial Intermediation Failure
• Office Hours: Costs of Inflation
• Why Governments Create Inflation
• Inflation calculator – BLS
• Homework 7 – doc

8. AS-AD model  (ch 11,12,13)  Midterm test due

• Intro to Business Fluctuations
• The Aggregate Demand Curve
• The Long-Run Aggregate Supply Curve
• Sticky Wages
• The Short-Run Aggregate Supply Curve
• Changes in Velocity
• Understanding the Great Depression
• Office Hours: Using the AD-AS Model
• Office Hours: Multiple Shocks with the AD-AS Model
• AS and AD – video
• AS and AD viewpoints – video
• Business Cycles Explained: Sticky Wages & Prices – learnliberty
• Business Cycles Explained: Keynesian Theory – learnliberty
• Keynes Explains Cure to High Unemployment (1939)
• Game of Theories: The Keynesians
• Game of Theories: The Monetarists
• Game of Theories: Real Business Cycle
• Game of Theories: The Austrians
• Game of Theories: The Great Recession
• Homework 8 – doc

9.  Fiscal policy (ch.17)

• Introduction to Fiscal Policy
• Fiscal Policy: The Best Case Scenario
• The Limits of Fiscal Policy
• The Dangers of Fiscal Policy
• Fiscal Policy and Crowding Out
• Watch ‘Fiscal policy’ and ‘Budget Deficit’ sections of this course
• Fiscal policy – in AS-AD model, video
• Taxes and budget – video
• Taxes – crash course
• Crowding out and lags – video, why fiscal policy may not work
• Sources of federal tax revenue – cbpp.org
• Federal budget piecharts – concordcoalition.org
• federal income tax brackets in US – this year
• Who does not pay taxes? – Tax Policy Institute
• Who pays income taxes – Pew
• Who pays taxes – in smart charts
• Why the rich pay lower taxes – crashcourse
• Historical individual income tax rates – tax policy center
• Average taxes over the last 70 years – changes
• State tax rates – lots of facts from tax policy center
• Understanding debt and budget deficit – Crashcourse
• Who holds US public debt – chart
• Deficit, debt and interest -cbpp.org
• Public debt amount– Dept of Treasury, current debt
• The Debt Limit Explained -youtube
• Rank countries by public debt – CIA factbook
• Does Stimulus Spending Work? – learnliberty
• What Are the Dangers of Too Much Debt? -learn-liberty
• Social Security vs. Private Retirement – learnliberty
• SS tax rates on ssa.gov
• Slides shown in class – pdf
• Homework 9 – doc

10.    Money and banking (ch 14) 

• What is money? –video
• The Fed – video
• Creating money – video
• Monetary Policy and the Fed
• The U.S. Money Supplies
• The Money Multiplier
• The Federal Reserve as Lender of Last Resort
• US Banking – Glass-Steagall act 1933
• About the Fed -purpose and functions – Fed official site
• Current M1 and M2, change from previous year – Fed
• How Much Money is There on Earth?  -vsauce
• The History of U.S. Money – fed video
• Banking basics – Khan academy
• Money and debt – crash course
• Saving and Borrowing – mruniversity
• What Do Banks Do? – mruniversity
• Four Reasons Financial Intermediaries Fail
• The Great Recession
• Money and banking -further readings
• Homework 10 – doc

11.    Monetary policy (ch 15)  

• Monetary policy – video
• The Tools of Monetary Policy – video
• Monetary policy & fed – crashcourse explanation
• Monetary Policy and the Fed
• How the Fed Worked: Before the Great Recession
• How the Fed Works: After the Great Recession
• The Federal Reserve as Lender of Last Resort
• Monetary Policy: The Best Case Scenario
• Monetary Policy: The Negative Real Shock Dilemma
• When the Fed Does Too Much
• Why Not Print More Money? – learn liberty
• Quantitative easing 1 – khan
• Quantitative easing 2 – khan
• Explaining the Great Recession– learnliberty
• How long will the interest rates stay low? – country song
• Homework 11–  doc

12. Exchange rates  (ch 10, 16)

• Imports, exports, exchange rates– crashcourse
• Introduction to Foreign Exchange Markets  youtube
• Determinants of Exchange Rates and Managed Exchange Rate Systems youtube
• Demand and Supply Applied: Exchange Rates
• Exchange Rates-youtube
• Purchasing Power Parity– marginal revolution
• Real Exchange Rates
• Real and Nominal Exchange Rates
• Are Devaluations Contractionary?
• Speculative Attacks
• The “Peso Problem”
• Long Swings in Exchange Rates
• Swiss Franc Peg
• Capital Controls
• Currency Manipulation
• Chinese Currency Manipulation
• Borrowing in Your Own Currency
• Homework 12 – doc

13.   Final test

For further study:

• Marginal Revolution – many videos and questions with answers
• The Atlantic – business section
• Bloomberg news – free news source
• WSJ Real Time Economics blog
• Freakonomics -podcasts
• We the economy – short films
• FEE.org – economics stories
• Great Depression  video
• What caused the Depression of the 1930s? – NY Times
• Why was the Great Depression a disaster waiting to happen?
• The Return of Depression Economics, Krugman, Foreign Affairs
• Economic Policy Institute – current issues in US economy
• Economic History Encyclopedia
• Secret History of the Credit Card – PBS Videos
• Frontline videos from PBS
• Intro to Economics – pdf book from mises.org
• Great economists – from San Francisco Fed
• http://www.quandl.com/ – huge econ data archive
• Economics  textbooks, open sources online
• Keynes for kids – intro to Keynesian economics
• Policy issues at Mercatus center – GMU
• How the economy works – 30min film
• Podcasts – various topics from basic economics – StLous fed
• Economic indicators for US and other countries – NY fed
• Discussion of hot econ issues at a teaching econ website
• Regional Economist – current issue from St Louis fed
• US Department of Commerce Bureau of Economic Analysis
• http://www.forecasts.org/data/index.htm – government statistics
• St. Louis Fed macro data
• http://www.economagic.com/ -lots of econ data, charts
• www.visualizingeconomics.com
• www.Project-Syndicate.org
• Economics in person video talks – SF fed
• Video courses from INETeconomics – macro, money
• Rosling: Asia’s rise — how and when – TED global growth
• Pluralist economics – Keynesian, Marxist, Austrian, ecological
• How the economy works – for discussion after monetary & fiscal
• For discussions: i-net topics – videos