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:


                           Week 14


          November 29, 2016     Chapter 16: Macro Policy Debate: Active or Passive?


          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


          September 29, 2016     Chapter 7: Inflation continued and Chapter 8: Productivity & Growth
          • Finish Reading Chapter 7 and read Chapter 8
          • Review Unemployment
          • Inflation
          • 3 definitions
            • Deflation
            • Disinflation
            • Hyperinflation
          • Two Sources of Inflation
            • Demand-pull inflation
            • Cost-push inflation

          • Chapter 8
          • Most recent Productivity numbers
          • Productivity and Growth
            • A shift in the PPF
            • Productivity - what is it?
            • Labor ProductivityPer Worker Production Function
            • Technological Change and "Know How"
            • Rules of the Game
          • McEachern Chapter 8 PPT

          •                  Week 4

            September 20, 2016     Chapter 6: Tracking the U.S. Economy

            • Read the first part of Chapter 6
            • Due TODAY!! - 3 goals, indicators and values for the U.S. AND China Now you are adding numbers to the last quiz handed back on Thursday.
            • Notice that you can find all the numbers you need below - make sure to state whether the data is monthly, quarterly or annual!
            • 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
            • The Expenditure Approach or Aggregate Expenditures
              • Consumption (PCE: Personal Consumption Expenditures)
              • Investment Spending
              • Government Expenditures
              • Net Exports: Exports minus Imports
            • The Income Approach
              • Aggregate Income = Wages, Rent, Interest, and Profit
            • 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


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    By Andrew L. H. Parkes, Ph. D.