Economics | Intro to Macroeconomics:Honors
S202 | 1657-1658 | Prof. Leeper

Honors Principles of Macroeconomics

Macroeconomics studies economy-wide phenomena. These include how fast
economy grows, how many new jobs are created, and how overall prices
change. The phenomena emerge from the interactions of consumers,
producers, financial market participants, and governments. Government
policies initiated by the President, Congress, or the Federal Reserve
profoundly affect your economic well being. Fiscal policy determines
tax bill and how big a player the government is in the economy.
policy influences interest rates charged on credit cards, student
and car loans. Taken together, monetary and fiscal policy strongly
employment prospects and inflation. A sample of the questions this
addresses is:

What are the sources of long-term economic growth?

Why do countries regularly experience episodes of expansion and

What causes inflation and why do some countries suffer from very
inflation, while others get by with little?

How do policy decisions affect the likelihood that you will find
keep a job? How do they influence your take-home pay?

How do banks and other financial institutions fit into the macro

Why does the Federal Reserve feel the need to raise interest rates
offset future inflation and lower interest rates to accelerate future
economic growth?

How does the federal government plan to pay off the debt it incurs
through budget deficits?

Are trade deficits bad?  Is a strong currency good?

This course will introduce students to the analytical tools
macroeconomists use to address questions like these.  The tools
basic models of how goods markets, labor markets, and financial
interact to determine overall economic performance.  We course also
discusses current economic events.

An important aspect of understanding the macro economy is familiarity
macroeconomic data.  Some assignments will involve finding recent
data on the World Wide Web.  Several relevant links to data sources
available from my home page at

Another important aspect of learning about the macro economy is
abreast of current economic developments.  To that end, student are
expected regularly to read a reputable source for economic news and
analysis.  Some suggestions of such publications are the Wall Street
Journal, The New York Times, The Financial Times, and The Economist (a
weekly magazine).  I will occasionally hand out copies of articles
current macroeconomic events.  Some of the articles will be discussed

The course culminates with a mock Federal Open Market Committee (FOMC)
meeting of the Federal Reserve System.  The FOMC is the policymaking
of the Fed and meets every six weeks to decide how to set the
interest rate.  Students play the roles of Federal Reserve officials
use Federal Reserve web sites to obtain information about the macro
economy.  The meeting ends with a formal vote on the setting of the
interest rate.  This exercise pulls together all the material learned
during the semester.

The textbook is Introduction to Macroeconomics, Second Edition by Alan
Stockman. The author is a leading macro/international economist in the
United States. His text is very modern and carefully written, and it
contains a fair amount of actual economic data.

Eric M. Leeper                            tel. (812) 855-9157
Department of Economics                   fax. (812) 855-3736
Indiana University                        email:
304 Wylie Hall
100 S. Woodlawn Ave.
Bloomington, IN 47405