Problem Sets and Lecture Slides
Macroeconomics is a subject matter which is always timely and interesting. We will analyze the major determinants of national output, unemployment, inflation, and economic growth, along with aspects of the international economy like trade. The course is concerned with macroeconomics - with the economy in the aggregate rather than with the details of an individual market such as peanuts; with the behavior of total consumer spending rather than with that of an individual household. The issues raised are important because they affect everyone, directly or indirectly. Beyond its substantive material, this subject is of interest because it teaches you how economists think, how they go about solving problems.
This course is an introductory course with no prerequisites. However, since we will use graphs and elementary algebra extensively, it may be useful to review your high school notes. The requirements for the course include five problem sets, two midterm exams and a final exam. The midterm exams will be given in class on Thursday 27 February and Thursday 10 April. The final exam will be given on the afternoon of either Monday 12 May or Thursday 15 May depending on your section. The problem sets will count for 25%, each midterm exam 18%, the essay assignment 7%, and the final exam 32% of the final grade. In addition to the graded assignments, class attendance is essential in this course because the main “text” for the class is the lecture notes.
The main readings to supplement the lecture notes will be from Case, Fair and Oster, Principles of Macroeconomics, 11th edition, Pearson Publishing, 2014. The textbook is available for purchase at Huntley bookstore. All information for the course will be posted on this web page including the problem sets.
If any material is ever unclear, or even if everything is perfectly clear, please come chat with me about economics or anything for that matter. If you have a short question, please feel free to call. For longer and better explanations, come by my office during office hours or make an appointment to see me at your convenience. I can be reached at the following:
Office |
Fletcher 216 |
Office Hours |
Wed 8:30-10; Thurs 8:30-10 |
Phone |
607-3769 |
lyamane@pitzer.edu |
You can leave voicemail at the office or send me email 24 hours a day.
I invite you to join me for Economics Lunch on Fridays during the semester. I will have lunch at McConnell Dining Hall, generally in the East Wing, from 12 noon to 1pm every Friday. We can talk about the problem set, economics, or anything you like.
PART I: INTRODUCTION TO ECONOMICS
The Scope and Method of Economics Ch 1
The Economic Problem: Scarcity and Choice Ch 2
Demand, Supply, and Market Equilibrium Ch 3
Demand and Supply Applications Ch 4
Part II: CONCEPTS AND PROBLEMS IN MACROECONOMICS
Introduction to Macroeconomics Ch 5
Grossly Distorted Picture
Measuring National Output and National Income Ch 6
Study Ranks Joblessness Top Factor in Gang Toll
Unemployment, Inflation, and Long-Run Growth Ch 7
On the Twelfth Day of Christmas, You’ll Pay $114K
MIDTERM #1 Thursday 27 February
Part III: THE CORE OF MACROECONOMIC THEORY
Aggregate Expenditure and Equilibrium Output Ch 8
The Government and Fiscal Policy Ch 9
The Money Supply and the Federal Reserve System Ch 10
Money Demand and the Equilibrium Interest Rate Ch 11
The Determination of aggregate output, the Price Level, and the Interest Rate Ch 12
Mishkin, What Should Central Banks Do?
Policy Effects and Cost Effects in the AS/AD Model Ch 13
The Labor Market In the Macroeconomy Ch 14
MIDTERM #2 Thursday 10 April
Part IV: FURTHER MACROECONOMICS ISSUES
Financial Crises, Stabilization, and Deficits Ch 15
Household and Firm Behavior in the Macroeconomy: A Further Look Ch 16
Long-Run Growth Ch 17
A Brief History of Economic Time
Alternative Views in Macroeconomics Ch 18
Part V: THE WORLD ECONOMY
International Trade, Comparative Advantage, and Protectionism Ch 19
Krugman, What Do Undergraduates Need to Know about Trade?
Open-Economy Macroeconomics: The Balance of Payments and Exchange Rates Ch 20
Economic Growth in Developing and Transitional Economies Ch 21
FINAL EXAM Monday 12 May
Internet
Resources for Economists
Career
Information for Economists
Nobel
Prize Winners
Bureau of
Labor Statistics
Economic Report of the President
Federal
Reserve Bank of St. Louis (FRED)
Economic
Statistics Briefing Room - White House
Board of
Governors
of the Federal Reserve
National
Debt Clock
Hyperinflation in Hell
Problem Set #2 Due Thursday 20 February
Problem Set #3 Due Thursday 13 March Mackerel Economics
Problem Set #4 Due Thursday 3 April
Problem Set #5 Due Thursday 1 May
week one 1/21
week two 1/28
week three 2/4
week four 2/11
week five 2/18
week six 2/25
week seven 3/4
week eight 3/11
week nine 3/25
week ten 4/1
week eleven 4/8
week twelve 4/15
week thirteen 4/22
week fourteen 4/29
Case Fair Oster Macroeconomics Problem Solutions
You can download a copy of Adobe Acrobat Reader 11.0 to read these PDF files.
Throughout the 1900s, per capita GDP grew about 2.1% per year. Though 2.1% may not sound like a lot, it means that per capita GDP increases by almost a factor of 8 every 100 years! The standard of living rose steadily through the century. Each generation could expect to have a higher standard of living than the previous generation, so most kids could expect to do at least as well economically as their parents. The quality of your lives today is substantially higher than the quality of your grandparents' lives when they were your age.
But since 2000 per capita GDP growth has been very sluggish, less than 1% per year. Even in the 1930s we did better. This period of sluggish growth has been called “secular stagnation” or “the great stagnation.” Should we expect these slower growth rates going forward? We had the “Great Recession” from December 2007 to June 2009 in the U.S. But is there more to the slow growth in this century than the great recession? Are we in an extended period of much slower growth? And if so, why? Or are we just recovering very slowly from a very deep recession? What economic policy recommendations would you make? Write an essay of approximately 1000 words addressing one or more of these questions.
When the size of the pie is growing, it is easy to give everyone more pie. But when the pie stops growing, more pie for me means less pie for you. This can explain the unprecedented fighting between and within the political parties in Washington, D.C.
Do not merely parrot back the text or lectures. Do read some of the supplementary readings. If you want additional views on these issues, you can read some journals of opinion like Business Week, The New York Times, The Wall Street Journal, The Economist, The New Republic, National Review, as well as more scholarly journals like Challenge and Brookings Papers on Economic Activity, or books from the American Enterprise Institute and the Brookings Institution. This essay is due on Tuesday 6 May.
References:
John Cassidy, “Is Larry Summers Right About “Secular Stagnation”?”, The New Yorker, January 8, 2014.
Tyler Cowen, The Great Stagnation, Dutton, 2011.
Robert Gordon, "Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds," NBER Working Paper 18315, August 2012.
Paul Krugman, “Secular Stagnation, Coalmines, Bubbles, and Larry Summers,” The New York Times, November 16, 2013.
Lawrence Summers, “Preempting economic stagnation,” The Washington Post, December 20, 2013.
Lawrence Summers, “Strategies for growth,” The Washington Post, January 6, 2014.
Matthew Yglesias, “Understanding the “Secular Stagnation” Debate,” Slate, January 6, 2014.
CBO, Revisions to CBO's Projections of Potential Output Since 2007, February 2014.