Honors | Introduction to Macroeconomics - Honors (ECON)
S202 | 15067 | Eric Leeper
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
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
Why does the Federal Reserve feel the need to "slowdown" a rapidly
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
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.
The textbook is Introduction to Macroeconomics by Alan C. 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.