Economics | Honors Principles of Macroeconomics
S202 | 1657 | Prof. Leeper


Honors Principles of Macroeconomics

S202: Section 1657, Spring 2000, 1:00-2:15PM, MW, WY 005
Eric M. Leeper, 304 Wylie Hall, 855-9157, eleeper@indiana.edu


Macroeconomics studies economy-wide phenomena. These include how fast
the economy grows,
how many new jobs are created, and how overall prices will 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 your tax bill and
how big a player the
government is in the economy. Monetary policy influences interest
rates charged on credit cards,
student loans, and car loans. Taken together, monetary and fiscal
policy strongly affect employment
prospects and inflation. A sample of the questions this course
addresses is:

What are the sources of long-term economic growth?
Why do countries regularly experience episodes of expansion and
recession?
What causes inflation and why do some countries suffer from very
high inflation, while others
get by with little?
How do policy decisions affect the likelihood that you will find
and keep a job? How do they
influence your take-home pay?
How do banks and other financial institutions fit into the macro
economy?
Why does the Federal Reserve feel the need to raise interest rates
to 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 include basic models of how goods markets,
labor markets, and financial
markets interact to determine overall economic performance.  We course
also discusses current
economic events.

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


http://php.indiana.edu/~eleeper/econlinks.htm

Another important aspect of learning about the macro economy is
staying 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 about current macroeconomic
events.  Some of the articles
will be discussed in class.

The course culminates with a mock Federal Open Market Committee (FOMC)
meeting of the Federal
Reserve System.  The FOMC is the policymaking arm of the Fed and meets
every six weeks to decide
how to set the short-term interest rate.  Students play the roles of
Federal Reserve officials and 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.