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Economics 2: Principles of Macroeconomics

Fall 2012
Prof. E. McDevitt

Office: Bunche 2255
Office Hours: TuTh, 9:30 to 10:30 a.m.
I also hold additional office hours in the week leading up to an exam.

Course Description: Introduction to principles of economic analysis, economic institutions, and issues of
economic policy. Emphasis on aggregative economics, including national income, monetary and fiscal
policy, and international trade. Discussion on financial markets, labor markets, inflation, Federal Reserve

Lectures: It is very important that you attend all of the lectures and take good lecture notes since I will
frequently depart from the textbook. It is highly recommended that you rewrite your notesthis is a proven
and productive way to learn the material. If there is something you do not understand please be sure to ask
me and/or your TA.

Study Questions: Study questions with solutions will be provided. They will be posted on the course
website at . The study questions are
very useful for preparing for the exams. Make sure you do all of the questions. Also, try making up your
questions, perhaps variations on the study questions. In addition to study questions I also post other
optional readings and/or links.

Textbook: Cowen and Tabarrok, Modern Principles of Economics (2
edition). The first edition is also
fine but please note that the chapter numbers listed below are from the 2
edition and may not be the same
number in the 1

Classroom rules: Please make sure you turn off and put away your smart phones, etc. Please pay close
attention to the lectures. In other words, do not be chatting with your neighborthis is annoying to students
who are trying to listen to the lecture. If you have questions, you can ask me or a TA during their sections.
If you feel you cannot comply with these rules then you should not come to lecture.

EXAMS: There will be two exams. The approximate weighting of the exams is as follows:
First Exam (October 16, Tuesday)- 20%.
Second Exam (November 13, Tuesday)-30%.
Final Examination (Wednesday, December 12, 8:00-11:00am) - 50%
ALL exams must be taken at the scheduled time. Exams will consist of multiple choice questions and
essay/problem questions. The final exam is cumulative. I occasionally use two rooms for the exams. The
second room will be announced in class and posted on the class website when the information becomes

EXAM RULES: Please note that calculators are NOT allowed for the exams. You will NOT be allowed to
have cell phones or any other electronic devices on your desk during the exam. Once the exam begins, you
will not be allowed to leave the room until you hand in your exam, so please plan accordingly. All
backpacks should be zipped closed and all books put away. Failure to do so will delay the distribution of
the exams for the entire class. When I call for the exams, all writing must stop. All that students should
have on their desks is a pen/pencil (s) and their photo ID card (which functions as a straightedge for
drawing graphs).

POLICY ON MISSED EXAMS: If a student has a valid medical excuse and can provide documentation
of such of an excuse, or if the student has received prior permission (at least one week in advance of the
exam) to miss an exam from the instructor, then additional weight will be placed on the final exam. Prior
permission to miss an exam is only granted for serious and compelling reasons. A student who misses an
exam without a valid medical excuse or without receiving prior permission will receive a zero.

pre-existing illness or condition who requests special arrangements must (a) qualify under OSD rules for
such special arrangements and (b) must take the exam with OSD. Any such arrangements with OSD must
be made the first week of classes. The instructor must be informed of any such arrangement in the first
week of classes. For additional information and the qualification conditions of the Office of Student
Disabilities (OSD), please visit their website at . All other students
must take the exam at the scheduled time under the same time constraints. It is the responsibility of all
students who request special arrangements with OSD to be familiar with all of their rules as well as the
rules of this class.

Any cases of cheating will be reported to the Office of the Dean of Students. For more details please refer
to the Office of the Dean of Students website at

T. A. DUTIES: TAs will be responsible for handing back exams and reviewing the answers. Once the
review is finished, the exams will be collected immediately. Students will also be allowed to look at their
exams during TA office hours, but may not copy down questions or take the exams with them. Grade
appeals should be made to your TA in writing. If you are not satisfied you may appeal to the professor.
When a grade on an essay/problem question is appealed, the entire essay/problem section will be reviewed.
Any grade appeals must be made within TWO weeks from the day the exams are first available for review.

1. CANTU GARCIA, CARLOS, sections 1D (Tu 2:00) and 1G (Tu 1:00),
2. CASTAGNINO, TOMAS, sections 1F (W 4:00) and 1I (F 1:00),
3. GIULIANO, FERNANDO, sections 1A (M 12:00) and 1K (W 3:00),
4. SHI, RUOYAO, sections 1B (M 2:00) and 1C (T 5:00),
5. SONG, ZHUOFU, sections 1E (W 9:00) and 1L (F 10:00),
6. TRAN, ALLEN, sections 1H (Th 10:00) and 1N (Th 2:00),

1. Supply and Demand review. The concepts of supply and demand are essential in all of your
economics course so I will be providing a review.
2. Present value and future value. Stock markets and personal finance. Asset price bubbles. Efficient
Markets Hypothesis. CHAPTER 22
3. GDP and its measurement. Nominal vs. real GDP; price index numbers; growth rates in GDP;
composition of GDP; problems the GDP measurement; GDP per capita. CHAPTER 24
4. Saving, Investment and Financial System; loanable funds market; financial intermediation; asset
Prices; financial crises. CHAPTER 27
5. Labor Market, unemployment; production function; economic growth CHAPTERS 28 & 25
6. Price level, inflation, Quantity Theory of Money; nominal vs. real interest rates, Fisher Effect.
7. Business fluctuations, aggregate supply and aggregate demand. CHAPTER 30
8. Federal Reserve System and monetary policy. CHAPTER 32
9. Federal Budget: taxes and spending; debts and deficits. CHAPTER 34
10. Public goods. CHAPTER 18
11. Public choice. CHAPTER 19
12. International Finance. CHAPTER 36