Parkes' Principles of Macroeconomics Assignments Page, Fall 2016
First Written Assignment is here, Due October 13, 2016 BCC is available in FCB or on SKYPE Business Communication Center
Second Written Assignment is here, Due December 1, 2016 The article to read is here: Article on Infrastructure Spending
Tentative Schedule and Course Assignments:
- Chapter 18: International Finance
- The Foreign Exchange Market revisited
- Factors affecting the For Ex Market
- Purchasing Power Parity
- Floating versus Fixed Exchange Rates
- The Gold Standard
- Bretton Woods
- The Recent Floating Exchange Rate System
- McEachern Chapter 18 PPT
December 8, 2016 Review
Week 16
December 13, 2016 AT 5:30 pm! Final Exam over All of Macroeconomics
December 1, 2016 Chapter 18: International Finance
- Chapter 18: International Finance
- Balance of Payments
- Internatinal Economics Transactions
- Trade Balance
- Current Account Balance
- Financial Account Balance
- Trade Deficits and Surpluses
- EIA - Imports
- US BOT
- US CA
- US CA/GDP
- The Foreign Exchange Market
- The Supply and Demand for Foreign Exchange
- Determining the Equilibrium Exchange Rate
McEachern Chapter 18 PPT
Week 13
November 22, 2016 Chapter 16: Active or Passive?
- Chapter 15: Monetary Theory and Policy, continued
- Money and LR Aggreagate Demand
- The Equation of Exchange
- The Quantity Theory
- The Velocity of Money: Is it Stable?
- Targets and Quantitative Easing
- McEachern Chapter 15 PPT
- Chapter 16: Macro Policy Debate: Active or Passive?
- Discretionary Policy: To use or not to use?
- Passive Policy: Don't Do ANYTHING!!
- Activist Policy: Do Something!!
- The Lags Revisited
- Recognition Lag
- Decision-Making Lag
- Effectiveness Lag
- McEachern Chapter 16 PPT
November 24, 2016 HAPPY THANKSGIVING!!!
Week 12
November 15, 2016 Exam 2: Chapter 14: Banking and the Money Supply
- Chapter 14: Banking and the Money Supply
- How Banks Work
- Financial Intermediaries
- Starting a Bank
- Reserve Accounts
- How Banks Create Money
- Through Excess Reserves
- The Rounds
- Reserve Requirements and Money Expansion - the Money Multiplier
The Three Tools of the Fed
Problem Set #4
Problem Set #4 Answers
McEachern Chapter 14 PPT
November 17, 2016 Chapter 15: Monetary Theory and Policy
- Chapter 15: Monetary Theory and Policy
- The Demand and Supply of Money
- The Demand for Money
- Inerest Rates
- Supply and Equilibrium
- Short-Run: The Transmission Mechanism
- Interest Rates and Investment
- Adding SRAS Curve
- Recent History of the Fed Funds Rate
- Money and LR Aggreagate Demand
- The Equation of Exchange
- The Quantity Theory
- The Velocity of Money: Is it Stable?
- Targets and Quantitative Easing
- McEachern Chapter 15 PPT
Week 11
November 8, 2016 Exam 2: Chapters 9 - 13
November 10, 2016 Review the exam and Chapter 14: Banking and the Money Supply
- Chapter 14: Banking and the Money Supply
- M1 and other Ms (the Money Supply - definition) versus Credit Cards and Bitcoin
- How Banks Work
- Financial Intermediaries
- Starting a Bank
- Reserve Accounts
- How Banks Create Money
- Through Excess Reserves
- The Rounds
- Reserve Requirements and Money Expansion - the Money Multiplier
The Three Tools of the Fed
McEachern Chapter 14 PPT
Week 10
November 1, 2016 Chapter 13: Money and the Financial System
- Chapter 13: Money and the Financial System
- The Birth of Money
- Functions of Money
- Medium of Exchange
- Unit of Account
- Store of Value
- Money and Banking
- Bank Notes and Fiat Money
- The Value of Money
- McEachern Chapter 13 PPT
November 3, 2016 Review for Exam 2
- Chapter 13: Money and the Financial System
- Financial Institutions in the U.S.
- The Birth of the Fed
- Powers of the Fed: Reserves
- Board of Governors and the FOMC
- Regulating the Money Supply
- Deposit Insurance
- Money Market Mutual Funds
- Banking troubles and recovery
- Financial Crises of 2008 and TARP and Dodd-Frank Act of 2010
- McEachern Chapter 13 PPT
Week 9
October 25, 2016 Chapter 11: Fiscal Policy Continued and Chapter 12: Federal Budgets and Public Policy
- Chapter 11: Fiscal Policy continued
- Automatic Stabilizers
- Discretionary Fiscal Policy
- Using Discretionary FP to close a recessionary gap
- Using Discretionary FP to close an inflationary gap
- The Multiplier and the Time Horizon
- Historical discussion
- Lags in Fiscal Policy
- Permanent Income
- Recent Historical Fiscal Policy
- McEachern Chapter 11 PPT
- Chapter 12: Federal Budgets and Public Policy
- Federal Budget Process
- Budget Process - Congress and the President
- Entitlement Programs
- Fiscal Impact of the Federal Budget
- Deficits - Philosophies and debate
- Historical thoughts
- Crowding Out - Crowding In
- The Twin Deficits
- Surpluses in late 1990s
- "Sequestration"
- The National Debt and Perspective
- McEachern Chapter 12 PPT
>October 27, 2016 No Class - In St. Louis for the MVEA Conference
Week 8
October 18, 2016 Chapter 9: Aggregate Demand and start Chapter 10: Aggregate Supply
- Chapter 9
- Aggregate Demand
- Chapter 10: Aggregate Supply
- Aggregate Supply in the Short-Run
- Labor and Aggregate Supply
- Potential Output and the Natural Rate of Unemployment
- Actual Price level versus the Expected Price level
- The Short-Run Aggregate Supply Curve and Potential Output
- From the Short-Run to the Long-Run
- Short-run Equilibrium
- Long-Run Equilibrium
- Closing an Expansionary Gap or Recessionary Gap
- Aggregate Supply in the Long Run
- Wage Flexibility and Employment
- Supply shocks - beneficial and adverse
- Permanent shocks versus Temporary shocks
- McEachern Chapter 10 PPT
October 20, 2016 Chapter 11: Fiscal Policy
- Chapter 11: Fiscal Policy
- Automatic Stabilizers
- Discretionary Fiscal Policy
- Using Discretionary FP to close a recessionary gap
- Using Discretionary FP to close an inflationary gap
- The Multiplier and the Time Horizon
- Historical discussion
- Lags in Fiscal Policy
- Permanent Income
- Recent Historical Fiscal Policy
- McEachern Chapter 11 PPT
Week 7
October 11, 2016 Chapter 9: Aggregate Demand
- Chapter 9
- Aggregate Demand
- Consumption
- Consumption and Income: The Consumption Function
- MPC and MPS: DI = MPS + MPC
- The slope of the Consumption Function: MPC
- Net Wealth, the Price Level, the Interest Rate and Consumer Expectations
- The Life-Cycle Model
- Investment: Interest rates and Income effects
- Government Purchases
- Net Exports
- Aggregate Expenditures = C + I + G + NX
- Real GDP demanded
- Simple Spending Multiplier
- The Aggregate Demand Curve: Real GDP and Price Level
- McEachern Chapter 9 PPT
October 13, 2016 Finish Chapter 9 and start Chapter 10: Aggregate Supply
- Entrepreneur Paper Due today!
- Chapter 9
- Aggregate Demand
- Consumption
- Consumption and Income: The Consumption Function
- MPC and MPS: DI = MPS + MPC
- The slope of the Consumption Function: MPC
- Net Wealth, the Price Level, the Interest Rate and Consumer Expectations
- The Life-Cycle Model
- Investment: Interest rates and Income effects
- Government Purchases
- Net Exports
- Aggregate Expenditures = C + I + G + NX
- Keynesian Cross Homework - will be handed out in class
- Real GDP demanded
- Simple Spending Multiplier
- The Aggregate Demand Curve: Real GDP and Price Level
- McEachern Chapter 9 PPT
Week 6
October 4, 2016 Chapter 8: Productivity & Growth
October 6, 2016 First Exam: Chapters 1 - 8
Week 5
September 27, 2016 Chapter 7: Unemployment and Inflation
What then is Full Employment?
Unemployment Benefits
Underemployment
McEachern Chapter 7 PPT
September 29, 2016 Chapter 7: Inflation continued and Chapter 8: Productivity & Growth
There is a third approach called the "Value Added" Approach which adds up all the value added during the production process, see p.119 for example
Circular Flow Revisited
- Notice another accounting reference: Disposable Income equals Aggregate Income minus Net Taxes
- Leakages and Injections must be equal by definition
What about Leisure, Quality and Variety?
McEachern Chapter 6 PPT
September 22, 2016 Chapter 6 continued: Accounting for Price Changes
Week 3
September 13, 2016 Chapter 4: Demand, Supply, and Markets, continued
- Finish Reading Chapter 4
- Problem Set #1 - Due today!
- The Markets
- Transactions Costs
- A Surplus
- A Shortage
- Double Shifts
- Let's practice some of these
- Disequilibrium
- Price Floors
- Price Ceilings
- The National Economy, Chapter 5
- GDP - Focus now will be on Macroeconomics
- Flow versus Stock variables
- Mercantilism - accumulation of all the gold
- The Business Cycle - remember from Day 1 PPT
- The Business Cycle and inflation, what's all this about the Fed today
- The Global Economy
- Leading, Coincident, and Lagging Indicators
- Aggregate Demand and Aggregate Supply
- Notice this is now the Price Level we are learning about
- Also we use Real GDP, not Nominal GDP in our graphing
- Again, we MUST use the "other things remaining the same" concept
- With Aggregate Demand we have an inverse relationship, Aggregate Supply has a direct (positive) relationship between the price level and Real GDP
Equilibrium Real GDP McEachern Chapter 4 PPT
September 15, 2016 Chapter 5: The National Economy
- Problem Set #1 - Due Last Class, remember 2 letter grades off only today!
- Read Chapter 5
- For next class - 3 goals, indicators and values for the U.S. AND China
- Second quarter GDP, Second revision
- Consumer Price Index, Just released (Sept. 16 2016)
- Unemployment Rate (released on Sept. 2, 2016)
- Trading Economics.com, China, Indicators
- The Business Cycle and inflation, what's all this about the Fed today
- The Global Economy
- Leading, Coincident, and Lagging Indicators
- Aggregate Demand and Aggregate Supply
- Notice this is now the Price Level we are learning about
- Also we use Real GDP, not Nominal GDP in our graphing
- Again, we MUST use the "other things remaining the same" concept
- With Aggregate Demand we have an inverse relationship, Aggregate Supply has a direct (positive) relationship between the price level and Real GDP
Equilibrium Real GDP
A Brief History of the U.S. Economy
- The Great Depression and Before
- The Age of Keynes: up to the 1970s
- Two Important Concepts: The Federal Budget Deficit and "demand-side" economics
- Stagflation: Stagnant Growth and Inflation - the Oil Shocks
- Recent History: Supply-side Economics and the Federal Debt
- The Great Recession, 2007 to today
- Also note: Real GDP per capita (per person)
McEachern Chapter 5 PPT
Read the first part of Chapter 6
NIPA: The National Income and Product Accounts
- Two Approaches: The Expenditure Approach and the Income Approach
- Final Goods & Services
- Intermediate Goods are not counted
- Illegal goods and services, of course are not counted as with Bartering
McEachern Chapter 6 PPT
Week 2
September 6, 2016 Chapter 3: Economic Decision Makers
September 8, 2016 Chapter 4: Demand, Supply, and Markets
- Read Chapter 4
- Chapter 4: Demand, Supply, and Markets
- The Law of Demand: Price is inversely related to the Quantity Demanded, cp
- The Substitution Effect and Income Effect of a Price Change
- The OTHER Things, which Remained the Same
- Price of Substitutes
- Price of Complements
- Price Expectations
- Income: Normal Goods and Inferior Goods
- Number of Consumers in the Marketing Area
- Tastes and Preferences
- P-P-P-PINTs - The Demand side
- The "Law of Supply": Price is directly related to the Quantity Supplied, cp
- The Other Things that Remained the Same
- Prices of Inputs (Resources)
- Prices of Other Goods
- Expectations
- Suppliers (the number of producers)
- Technology (Know How)
- P-P-P-PESTs - The Supply side
- Recognize the differenc between a movement ALONG the curve (change in Price) and a SHIFT (change in one of the other things)
- McEachern Chapter 4 PPT
Week 1
August 30, 2016 Chapter 1: The Art and Science of Economic Analysis
- An Introduction to the Principles of Macroeconomics
- What are the 4 Resources in the Macroeconomy? p. 3
- With each resource is a payment to that resource.
- Some definitions: ECONOMICS, scarcity, good, service, market, rational self interest, marginal analysis
- The simple Circular Flow Model , p. 6
- Positive vs. Normative Economics
- Ceteris paribus and the fallacy of causation, what are secondary effects?
- Day 1 PPT An Introduction
- McEachern Chapter 1 PPT
September 1, 2016 Chapter 2: Economic Tools and Economic Systems
- Read Chapter 2
- You need to know these: What are the three Goals of any Macroeconomy?
- Grow the economy - Economic Growth
- Price Stability - not inflation OR deflation
- Full Employment - Everyone has a job
- Setting up the Production Possibilities Frontier (PPF)
- Opportunity cost (the NEXT BEST alternative)
- Sunk cost: don't consider what has already been paid and can not be recovered
- Comparative Advantage versus absolute advantage - everyone has a CA!
- Specialization of Labor/division of labor
The Production Possibilities Frontier (PPF), a simple model of the economy
Efficiency
Unattainable, given today's resources and technology
Shifting the PPF: availability of resources, increases in Capital, and technological change
What we learn from the PPF
What, How, and For Whom is production? Capitalism versus a Command Economy
Problem 14, Chapter 2, Homework due Tuesday for 5 pts.
McEachern Chapter 2 PPT
[Andrew's Home] - [Drew's Home Page]
email: andrew at andrewparkes.com
Last Update: December 6, 2016
By Andrew L. H. Parkes, Ph. D.