Honors | Introduction to Macroeconomics - Honors (ECON)
S202 | 9248 | Gerhard Glomm


MW 9:30-10:45am

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 policies 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 economic
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? How are the two
related?

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.
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.

Another important aspect of learning about the macro economy is
staying abreast of current economic developments. Some publications
worth reading are the Wall Street Journal, The New York Times, The
Financial Times, and The Economist (a weekly magazine). We will
occasionally hand out copies of articles about current macroeconomic
events.

The textbook by Burda and Wyplosz adopts a micro-based approach to
macroeconomics. This should make the transition from micro (S201) to
macro much smoother. More than most textbooks, Burda and Wyplosz’s
reflects modern thinking about macroeconomics.

“Principles” of Macroeconomics:
There is a guide to the course—really a detailed outline—that lays
out the key points that we think students should glean from the
course. We call these the “principles” of macro. Others might call
it a checklist of things you need to know to learn the basic
materials. This list is available at http://mypage.iu.edu/~gglomm/.

Grading:
Grades will be based on one midterm and one final exam scores and on
performance on homework assignments. The midterm exam receives a
weight of 30% in the computation of your course grade, while the
final exam receives a weight of 50%. Homework makes-up the remaining
20% of your grade. There will be 7 homework assignments. Late
homework assignments will not be accepted. I do not give the
economics department common final exam. If you miss an exam for a
valid reason, the weight of that exam shifts to the other exam. If
you need to miss an exam, you need to let me know before the
scheduled exam time.

Exam Dates:
Exam #1: Monday, March 5th in class
Final Exam: see IUB Final exam schedule

Homework Due Dates (subject to change with low probability):
Assignment #1:	Monday, January 22nd before class
Assignment #2:	Wednesday, January 31st before class
Assignment #3:	Wednesday, February 14th before class
Assignment #4:	Wednesday, February 28th before class
Assignment #5:	Wednesday, March 28th before class
Assignment #6:	Wednesday, April 11th before class
Assignment #7:	Wednesday, April 25th before class