ECO 203  Economics -- Macro 

Fall 2008, Tuesday, 7:00 PM-9:40 PM

Course Syllabus                           Dictionary Online                 

ECO 203 Grading Scale: 

A 100 - 93	B   85 - 83	C  75 - 73	D  65 - 63
A- 92  -89	B-  82 - 80	C- 72 - 70	D- 62 - 60
B+ 88  -86	C+ 79 - 76	D+ 69 - 66	F< 59

On the Net: Text Book Web Site: Key Concepts, PowerPoint's, Multiple Choice Quizzes

•  United States Economic Indictors: Current and Previous

•  United States Gross Domestic Product - GDP --August 28, 2008

•                 "GDP is defined as the total market value of all final goods and services produced within the country in a given period   of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value."

•  Wall Street Journal Sept 6, 2008 Misery Index and Unemployment Rate

•  "Economy's Fate on Credit Watch"  WSJ 9-16-08  because of "Crisis on Wall Street at Lehman Totters, Merrill is sold, AIG seeks cash--" WSJ 9-15-08

•  "Vengeance is Mine Sayeth the Lord - - But Scientists Differ", Page B1, Wall Street Journal, 10-15-04

•  "As two Economists Debate Markets, The Tide Shifts Belief in Efficient Valuation ...Irrational Investors, WSJ, 10-18-04

•  "Democrats are better for the Economy" by Robert Altman Oct 20, 2004 Page A16 Wall Street Journal

•  "Beware of the Triops Under the Christmas Tree", Page B1, Wall Street Journal, 11-23-04

•  Chapter 1  Outline: Thinking Like an Economist

• Chapter 2  Outline:  Comparative Advantage:  The Basis for Exchange

• Chapter 17 Outline: Macroeconomics: The Birds-Eye View of the Economy

                                    Chapter 17 Graphing our Economy per year: Unemployment, Inflation, Growth

• Chapter 18 Outline:  Measuring Economic Activity:  GDP and Umemployment               

•                       "U.S. Loses Top Spot to Switzerland In Global Competitiveness Survey" By MARCUS WALKER 

•                        in the  Wall Street Journal  September 26, 2006                       

•                           "Global Competitiveness Ranking Index of Other Countries 2006" Wall Street Journal Sept. 26, 2006

• Chapter 19 Outline:  Measuring the Price Level and Inflation

•                        "Don't Worry About Inflation" Wall Street Journal Sept 18, 2008

•                        "Credit Freeze and Your Paycheck", CNN Money.com Sept 28, 2008

• Chapter 20 Outline:  Economic Growth, Productivity, Living Standards

•                         "Phelp's Work on Inflation Wins Nobel"  by  Mark Whitehouse,  Wall Street Journal Oct 10, 2006 Page A2

• Chapter 21 Outline:  Workers, Wages, and Unemployment in the Modern Economy

•                           "Inflation Rate",     Inflation Rate.Com Oct. 13, 2008

•                            "Paul Krugman Wins the Nobel Economics Prize"  Wall Street Journal Oct 13, 2004

•                            USA Population Clock --Today, this very second!, U. S. Census Bureau

• Chapter 22 Outline:  Saving and Capital Formation

•                             "Many Americans Expect to Rely Most on Savings in Retirement, Poll Shows", Wall Street Journal

•                             August 21, 2006, Page R2

•                           U.S. savings rate hits lowest level since 1933 Jan 30, 2006 Article on the NET by the Associated Press.

•                            On the net shows US Saving Rate is Negative  April 18, 2007

•                                                "Americans are spending more than they are earning pushing the national savings rate to lows not seen since the Great Depression. The Commerce Department released a report saying that personal savings fell to a negative .5% in 2005.
  
  This means that people spent everything they earned and more."

•                             "Calculating and Understanding Real Interest rates"  About.Com : Economics

• Chapter 23 Outline:  Money and the Federal Reserve

•                            Current St Louis Fed Components of M1 and M2 (Table 23.1 in your text)

• Chapter 24 Outline:  Financial Markets

• Chapter 25 Outline:  Short-Term Economic Fluctuations:  An introduction

•                            Wall Street Journal Survey Oct. 2008  Recession or No Recession?

•                             "Obama Builds Ties To Chicago School"  WSJ Nov. 10, 2008

• Chapter 26 Outline: Spending Output in the Short Run

•                                    Power Point for Chapter 26         

• Chapter 27 Outline:  Stabilizing Aggregate Demand:  The Role of the Fed

•                                 Federal Funds Rate from Nov 04 to Oct 08

• Chapter 28 Outline:  Inflation, Aggregate Supply, and Aggregate Demand

• Chapter 29  Outline:  The Practice and Pitfalls of Macroeconomic Policy

•                

  Key Concepts When inflation in the economy is deemed an impediment to economic performance, the Fed can implement a "tight" monetary policy (an upward shift in the monetary policy reaction function). A tight monetary policy will lead to disinflation, but may create a significant recessionary gap in the short-run. While the long-run reduction in inflation is good for the economy after output returns to potential, the short-run consequences can be painful. Since the disinflation under Fed Chairman Volker, the United States has had relatively low inflation. Low levels of inflation have been credited with helping create economic growth and stability. In response to changes in spending that can lead to inflation, the Fed can maintain stable inflation and output by adjusting its target real interest rate to the real interest rate at which saving equals investment. The Fed can respond to adverse supply shocks to keep inflation low. However, the Fed may be forced to choose between maintaining stable prices and stabilizing output. Anchored inflationary expectations are crucial to effective policy-making by the Fed. The Fed focuses on the core rate of inflation (inflation absent the prices of energy and food) because energy and food are the two items most commonly responsible for inflation shocks. Inflationary expectations and credibility are crucial to effective monetary policy. Anchored inflationary expectations facilitate improved macroeconomic performance. To achieve anchored expectations, a central bank must have credibility. Credibility derives from central bank independence, numerical inflation targets, and the reputation of the central bank as an "inflation hawk." The existence of incomplete knowledge, imperfect control over policy instruments, and inside and outside policy lags make macroeconomic policymaking an art as well as a science.