middlesex how to build concept map ... what is the current state of inflation there? how does that...

MIDDLESEXCommunity College

B E D FO R D • MAS SAC H US ET TS • LOW E L L

Principles of Macroeconomics

Strategies for SuccessCOURSE GUIDE

Sponsored by the U.S. Department of Education Title III Grant, Strategies for Success: Increasing Achievement, Persistence, Retention & Engagement, 2008-2013.

Title III Strengthening Institutions Project Strategies for Success: Increasing Achievement,

Persistence, Retention and Engagement The Strategies for Success Title III initiative is a major, five‐year project (2009‐2013) funded by a two million dollar grant from the U.S. Department of Education. This initiative is intended to transform Middlesex Community College by improving the academic achievement, persistence, retention, and engagement of its students. The project focuses on reformed curricula and comprehensive advising. Reformed Curriculum involves the design of developmental and college Gateway courses and learning communities embedded with Core Student Success Skills related to critical thinking, communication, collaboration, organization, and self‐assessment. Overall, 45 courses will be impacted over the five years of the project. Comprehensive Advising involves the design of integrated advising services to include identification of academic and career goals, creation of realistic educational plans, and continuous tracking and intervention with an emphasis on the Core Student Success Skills. Comprehensive Advising Services will be specifically tailored to each program of study. Cross‐division curriculum and advising design teams composed of faculty and staff are designing, piloting, and assessing the curriculum and advising initiatives. The Title III grant provides resources to support faculty professional development related to designing and piloting new curriculum and advising students. The grant also supports the purchase of advising software programs and the hiring of a Pedagogical Instructional Designer, Learning Engagement Specialist, Advising Coordinator, and two academic advisors. The resources provided by the grant offer an exciting opportunity for the college community to work together to develop the strong programs and services that will increase student success.

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Contents Introduction .................................................................................................................................... 2

Lesson Plan: GDP around the World .............................................................................................. 3

Handout: GDP around the World .............................................................................................. 6

Lesson Plan: Unemployment ......................................................................................................... 7

Handout: How to Build Concept Map ............................................................................................. 9

Handout: Evaluation .................................................................................................................... 11

Lesson Plan: Monetary Institutions ............................................................................................. 12

Concept: ........................................................................................................................................ 12

Handout: KWL Chart‐ Monetary Institutions ............................................................................ 14

Handout: Monetary Institutions Terms .................................................................................... 14

Handout: Monetary Institutions ............................................................................................... 17

Lesson Plan: The Federal Reserve and Monetary Policy ............................................................. 19

Handout: Federal Reserve System and Monetary Policy KWL Chart ...................................... 22

Class Handout: The Federal Reserve System and Monetary Policy Terms .............................. 23

Class Handout: Student Guide to Sexton’s Exploring Macroeconomics ................................... 24

Handout: Federal Reserve and Monetary Policy ...................................................................... 27

Lesson Plan: The National Debt ................................................................................................... 30

Handout: National Debt ............................................................................................................ 33

Lesson Plan: Economic Essays The Big Issues ............................................................................. 34

Lesson Plan: International Trade ................................................................................................. 38

Handout: International Trade Crossword ................................................................................. 40

Appendix: Sample Course Syllabi .................................................................................................. 43

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Introduction ECO 140 Principles of Macroeconomics provides an introduction to the theory of income determination, business cycles, national income analysis and economic growth. The role of labor and capital markets in economic activity is examined to explore the problems of unemployment and inflation. The functioning and impact of the monetary system is introduced. Government stabilization activity utilizing monetary and fiscal policy is explored. The mechanics of international goods transactions and the balance of trade, as they influence the domestic economy are examined. This course satisfies a Social Science Elective and also the Values/Ethics/Social Policy Intensive Value. Pre‐requisites include placement above or successful completion of EN 2103, eligible for EN 1103, a minimum of one year of high school algebra or completion of MA 1103 or placement into MA 1104 This course has also been designed to meet the goals of the Title III grant, Strategies for Success: Increasing Achievement, Persistence, Retention and Engagement. The grant has outlined the following Core Student Success Skills (CSSS): Critical Thinking, Collaboration, Communication, Organization, and Self‐Reflection. The concept is to lead students to apply these skills as a method for learning course content. The expectation is that by practicing these skills in this course, they will develop into more successful college students overall, and as a result, persist in their college studies. Instructors: John Femia [email protected] (Team Leader) Robert Kaulfuss [email protected] John Driscoll [email protected] Camelia Bouzerdan [email protected]

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Lesson Plan: GDP around the World Concept: GDP is a measure of our country's PRODUCTIVITY. When we produce more, and our national output increases (faster than population growth) then our STANDARD OF LIVING increases. I give a simple analogy ‐ in an undeveloped country, Ethiopia for example, a father goes out each day, and looks for food. The concern is to SUSTAIN yourself, not IMPROVE your standard of living. But here, in the US, it is different. I will use my family as an example. My grandfather had a radio of which there were not many choices. My dad had one of the first televisions‐‐a big improvement from my grandfather's day. Now today, there is Cable TV, IPODS, the Internet, etc. When we increase our productivity, our STANDARD OF LIVING rises. Every generation (so far anyway) has had a higher standard of living than the one before, because we are constantly increasing GDP. We are now in a tough time, and there are fears that we have lived beyond our means. In the coming weeks, we will see how we have borrowed against our future, and our NATIONAL DEBT is so concerning, some are wondering if the next generation MAY be the first to actually have a decline in STANDARD OF LIVING. College Student Success Skills Addressed: Critical Thinking Learning Objectives: After successfully completing this activity, students will be able to:

• Explain how to measure GDP We calculate GDP with the formula (C+I+G+(x‐m)). Gross domestic product, or GDP, measures the market value of all final goods and services produced during the year by resources located in the United States, regardless of who owns those resources. The expenditure approach to GDP adds up the market value of all final goods and services produced in the economy during the year.

• Define Business Cycles Historically our economy goes through periods of Peaks, Contractions, Troughs and Expansions. Students will be introduced to these measures of GDP, and recognize where our economy is and has been in the Business Cycle and why at different times in history

• Discuss the circular flow of income and expenditures The circular‐flow model summarizes the flow of income and spending through the economy. Saving, net taxes, and imports leak from the circular flow. These leakages equal the injections into the circular flow from investment, government purchases, and exports.

• Assess the limitations of national income accounting GDP reflects market production in a given period, usually a year. Most household production and the underground economy are not captured by GDP. Improvements in the quality and variety of products also are often missed in GDP. In other ways GDP may overstate production. GDP fails to subtract for the depreciation of the capital stock or for the depletion of natural resources and fails to account for any negative externalities arising from production.

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• Explain how to account for price changes Nominal GDP in a particular year values output based on market prices when the output was produced. To determine real GDP, nominal GDP must be adjusted for price changes. The consumer price index, or CPI, tracks prices for a basket of goods and services over time. The GDP price index tracks price changes for all output. No adjustment for price changes is perfect, but current approaches offer a reasonably good estimate of real GDP both at a point in time and over time.

Materials:

• Textbook

• PowerPoint Lecture Notes

• Internet Research

• YouTube Video

Procedure: Students will:

1. Participate in a lecture discussion on GDP (lecture notes at end of this section). 2. Watch a video about historically how productivity and population shifts have changed the world. 3. Hans Rosling's 200 Countries, 200 Years, 4 Minutes ‐ The Joy of Stats ‐ BBC Four

Link: http://www.youtube.com/watch?v=jbkSRLYSojo. 4. Participate in a discussion board (or do in class presentations) on GDP Around the World. Each

student is assigned a different country and must answer the following questions regarding the standard of living there as compared to the United States. The project is outlined as follows:

***This project can be either a discussion board as outlined above, OR, you may decide to put the students into teams of 3 or 4 and have them compare and contrast 2 countries and do a PowerPoint presentation on the 2 countries. This works great with face to face courses, whereas the discussion board option seems to work best with on‐line sections.*** SOFT SKILLS: Identify the importance of and improve these skills:

• Reading‐ locates, understands, and interprets written information in prose and in documents and on the internet

• Writing‐ communicates thoughts, ideas, information, and messages in writing; and creates documents such as letters, directions, manuals, reports, graphs, and flow charts

• Arithmetic/Mathematics‐ performs basic computations and approaches practical problems by choosing appropriately from a variety of mathematical techniques

• Listening‐ receives, attends to, interprets, and responds to verbal messages and other cues

• Speaking‐ organizes ideas and communicates orally

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Identify the importance and improve these Thinking Skills:

• Creative Thinking‐ generates new ideas

• Decision Making‐ specifies goals and constraints, generates alternatives, considers risks, and evaluates and chooses best alternative

• Problem Solving‐ recognizes problems and devises and implements plan of action

• Visualizing‐ organizes, and processes symbols, pictures, graphs, objects, and other information

• Knowing How to Learn‐ uses efficient learning techniques to acquire and apply new knowledge and skills

Next Steps: Students will use the knowledge gained from examining our historical standard of living and the current state of the economy and make recommendations on what fiscal and monetary policies should be employed in a future paper. Assessment: Questions to be asked will change depending on the state of the economy, but as an example, here are some questions that may be asked: Attach the most recent reports from the Bureau of Labor and Statistics (www.bls.gov) and the Bureau of Economic Analysis (www.bea.gov). There is a lot of information on Productivity, Unemployment, Inflation, and our Balance of Trade. Have students submit a 4 page summary in Microsoft Word on “The Economy Today,” summarizing: 1. Productivity (GDP) what is happening right now ‐ Detail the components of GDP, (C+I+G+(x‐m). 2. What is going on with the Balance of Trade? Can you tell me about Imports and Exports? What does the status of the dollar value have to do with Imports and Exports? 3. The "recovery" we are in has been called a "Jobless Recovery" Why? Talk about businesses becoming more efficient and leaner. In your opinion, what has to happen for jobs to start increasing again? 4. What is the status of Inflation today? What is the Fed's short term and long term outlook on prices? http://www.clevelandfed.org/research/economy_at_a_glance.cfm

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Handout: GDP around the World I want to get an international flavor of life around the world. Each one of you has been assigned a country. While you will do some research, please do not just cut and paste information; that is boring – I want this discussion board to be fun, and interesting. 1 (5 points 50 words minimum) Find the Nominal GDP, and GDP per Capita in Dollars and World Rank for your country, and include where you got your source of information (Examples include CIA World Fact Book, or International Monetary Fund Ranking). 2 (5 points 50 words minimum) In addition to Productivity (GDP) ‐ what is the Unemployment Rate and what is the current state of Inflation there? How does that compare to the United States? 3 (5 points 50 words minimum) What is their Balance of Trade? Who are their trading partners? What do they Import, and what do they Export? 4 (5 points 50 words minimum) What type of Government do they have? How does it compare to the US? 5 (5 points 50 words minimum) Tell us 3 other fun or important facts about life in your country. 6 (5 points 50 words minimum) Comment on another classmate's posting as well, comparing and contrasting your country to a classmates’ country: Last Name First Name Country Student Last Student First Afghanistan Student Last Student First Angola Student Last Student First Bermuda Student Last Student First China Student Last Student First Denmark Student Last Student First France Student Last Student First Germany Student Last Student First Morocco Student Last Student First Iceland Student Last Student First Ireland Student Last Student First Italy Student Last Student First Japan Student Last Student First Poland Student Last Student First Luxembourg Student Last Student First Marshall Islands Student Last Student First Mexico Student Last Student First Canada Student Last Student First Sweden Student Last Student First Switzerland Student Last Student First Singapore Student Last Student First Monaco Student Last Student First Spain

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Lesson Plan: Unemployment Concept: Maintaining unemployment rate at a low rate is one of the most important macroeconomic objectives. In this chapter, the students will be introduced to some general concepts of unemployment which will serve as a basis for the further examination of unemployment. Also the students will examine the problems that come up when defining the concept of unemployment and compiling statistics on unemployment. Core Student Success Skills: Organization, Collaboration, Critical Thinking Learning Objectives: After successfully completing this activity, students will able to:

• List the three most important macroeconomic goals

• Classify the components of the labor force (employed and unemployed)

• Calculate the two major indicators of labor force: Unemployment Rate and Labor Force Participation Rate

• Label and illustrate the different types of unemployment

• Summarize the consequences of unemployment for the individuals, society and socio‐political life

• Explain the relationship between the demographic and career‐related factors and the unemployment rate

• Explore historical perspectives of the unemployment rate in US

• Design a concept map about the unemployment rate using the guide provided by the instructor

• Develop a group concept map about the topic unemployment

• Evaluate every member’s participation according to the chart rubrics provided by the instructor

Materials: Textbook: Exploring Microeconomics, 5th edition by Robert L. Sexton Procedure:

1. Students will watch a video from the news http://www.youtube.com/watch?v=TAzOenCTDnY. 2. The instructor will lecture the subject accompanied by the PowerPoint show. 3. Students will discuss the current state of the US economy, and learn basic economic concepts of

unemployment. 4. The instructor will explain the concept map of the unemployment topic. 5. Students will draw their individual concept maps following the instructions from the guide. 6. Students will bring in their concept maps. 7. Students will form groups of four and they will draw a collective concept map. 8. Every student evaluates the other persons in the group following the evaluation rubric.

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9. Every student will earn extra credit points for the next test averaging the points obtained for the individual concept map and the points earned for the group activity.

SOFT SKILLS: Identify the importance and improve these Basic Skills:

• Reading ‐ locates, understands, and interprets written information in prose and in documents and on the internet

• Writing ‐ communicates thoughts, ideas, information, and messages in writing; and creates documents such as a concept map

• Collaboration ‐ works jointly with others or together especially in an intellectual endeavor

• Listening ‐ receives, attends to, interprets, and responds to verbal messages and other cues

• Speaking ‐ organizes ideas and communicates orally

Identify the importance and improve these Cognitive Skills:

• Creative Thinking ‐ generates new ideas

• Visualizing ‐ organizes, and processes symbols, pictures, graphs, objects, and other information

• Knowing How to Learn ‐ uses efficient learning techniques to acquire and apply new knowledge and skills

• Application – put a theory into practical effect, manage an activity

• Synthesis – develop concept maps, create teams

• Reasoning ‐ discovers a rule or principle underlying the relationships between two or more objects and applies it when solving a problem

• Evaluation and Self‐evaluation – assess, justify

Next Steps: Lessons learned regarding unemployment will be used in future modules on the most important macroeconomic goals in United States, such as maintaining unemployment rate at a low level, low inflation, and achieving high rate of economic growth Assessment: The instructor will use a formative assessment of the students’ learning through the use of the minute paper and a concept map to assess the project grade.

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Handout: How to Build Concept Map

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Handout: Group Concept Map

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Handout: Evaluation Please assign scores that reflect your honest evaluation of the extent to which team members contributed to the team’s learning and performance. Instructions: In the following chart, please rate yourself and each member of your team on level of PREPARATION, KNOWLEDGE and PARTICIPATION, using the descriptions for each criteria provided below. Please note that you can give 5 points only for one person in your group!

Preparation

Were they prepared with outstanding, detailed and comprehensive materials that carried the group? • Prepared with notes and/or other additional materials – 5 points

• Some notes – 1 – 4 points

• No materials – 0 points

Knowledge

Did they know just about every correct answer from the guide? • Many correct answers ‐ 5 points

• One or few correct answers – 1‐ 4 points

• No correct answers or didn’t offer information to help the group build the concept map ‐ 0 points

Participation

Did they encourage others to contribute their ideas, share their own ideas, contribute productively to the discussion and decision‐making, leader of the group, involved everyone, helped the group form conclusions? • High level of participation, contributed a lot ‐ 5 points

• Minimal participation and contributions within the group – 1 – 4 points

• Sat silently, did not participate ‐ 0 points

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Lesson Plan: Monetary Institutions

Concept: Money and Monetary institutions are vital to our economy. In this chapter the students will be introduced to some general concepts regarding monetary institutions such as: what is money; how money is measured; how banks create money; and the money multiplier. This will serve as a basis for the further examination of the Federal Reserve System and monetary policy. Also the students will examine the collapse of America’s banking system during the period 1920 and 1933. College Student Success Skills Addressed: Communication, Collaboration, Organization, Critical Thinking, and Self‐Assessment Learning Objectives: After successfully completing this activity, students will able to:

• List the four most important functions of money

• Distinguish the components of the money supply

• Explain the Federal Reserve’s reserve requirement and how money is created

• Explain the Money Multiplier and discuss how the process of multiple expansions of the money supply works

• Explore the historical perspectives of the collapse of America’s banking system during the period 1920 and 1933

• Design a concept map about the Monetary Institutions using the guide provided by the instructor

• Develop a group concept map about the topic of Monetary Institutions

Materials: Textbook: Exploring Microeconomics, 5th edition by Robert L. Sexton Procedure:

1. Students will first complete a KWL Chart seeking to find out what they know about monetary institutions and what they want to learn about monetary institutions. (They will complete the chart for homework).

2. Students will watch a video from: www.khanacademy.org/finance‐economics/core‐finance/v/banking‐1

3. Students will watch excerpts from Frank Capra’s “It’s a Wonderful Life.” 4. The instructor will lecture the subject accompanied by the PowerPoint presentation. 5. The instructor will discuss: 1) how money serves as a: medium of exchange; measure of value;

store of value; and means of deferred payment; 2) currency, liquidity, the money supply, and what backs our money; 3) financial institutions and reserve requirements; 4) the money multiplier and the multiple expansion process; 5) what caused the collapse of the banking system between 1920 and 1933 and what actions were taken to avoid future bank failures.

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6. Students will discuss the current state of monetary institutions in the US, and learn basic economic concepts of monetary institutions.

7. The instructor will explain the concept map of the unemployment topic. 8. Students will draw their individual concept maps following the instructions from the guide. 9. Students will form groups of four and they will draw a collective concept map. 10. Students will do class exercises: crossword puzzle; fill‐in the blanks; participate in a jeopardy

game.















Next Steps: Lessons learned will be used in future modules on The Federal Reserve System and Monetary Policy. Assessment: The instructor will assess the students’ learning through the use of class exercises, crossword puzzles, fill‐in the blanks, and a jeopardy game.

14 Handout: KWL Chart Monetary Institutions

Name: ______________________ What I Know: What I Want to know: What I Learned:

Handout: Monetary Institutions Terms

15 Money ‐ Anything generally accepted in exchange for goods or services. Medium of Exchange ‐ The primary function of money, which is to facilitate transactions and lower transaction costs. Barter‐ Direct exchange of goods and services without the use of money. Means of Deferred Payment ‐ The attribute of money that makes it easier to borrow and to repay loans. Currency ‐ Coins and/or paper created to facilitate the trade of goods and services and the payment of debts. Legal Tender ‐ Coins and paper officially declared to be acceptable for the settlement of financial debts. Fiat Money ‐ A means of exchange established by government declaration. Demand Deposits ‐ Balance in bank accounts that depositors can access on demand. Transaction Deposits ‐ Deposits that can be easily converted to currency or used to buy goods and services directly. Traveler’s Checks ‐ Transaction instruments easily convertible into currency. Nontransation Deposits ‐ Funds that cannot be used for payment directly but must be converted into currency for general use. Near Money ‐ Nontransaction deposits that are not money but can be quickly converted into money. Money Market Mutual Funds ‐ Interest‐bearing accounts provided by brokers that pool funds into such investment as Treasury bills. Liquidity ‐ The ease with which one asset can be converted into another asset or into goods and services. M1 ‐ The narrowest definition of money; includes currency, checkable deposits, and traveler’s checks. M2 ‐ A broader definition of money that includes M1 plus savings deposits, time deposits, and non‐institutional money market mutual fund shares. Gold Standard ‐ Defining the dollar as equivalent to a set value of a quantity of gold, allowing direct convertibility from currency to gold. Gresham’s Law ‐ The principle that “cheap money drives out dear money”, given an alternative, people prefer to spend less valuable money. Commercial Banks ‐ Financial institutions organized to handle everyday financial transactions of business and household through demand deposit accounts and savings accounts and by making short‐term commercial and consumer loans. Savings and Loan Associations ‐ Financial Institutions organized as cooperative associations that hold demand deposits and savings of members in the form of dividend‐bearing shares and make loans, especially home mortgage loans.

16 Credit Unions ‐ Financial cooperatives made up of depositors with a common affiliation. Reserve Requirements ‐ Holdings of assets at the bank or at the Federal Reserve Bank as mandated by the Fed. Fractional Reserve System ‐ A system that requires banks to hold reserve equal to some fraction of their checkable deposits. Secondary Reserves ‐ Highly liquid, interest‐paying assets held by the bank. Balance Sheet ‐ A financial record that indicates the balance between a bank’s assets and its liabilities plus capital. Required Reserve Ratio ‐ The percentage of deposits that a bank must hold at the Federal Reserve Bank or in bank vaults. Excess Reserves ‐ Reserve levels held above that required by the Fed. Money Multiplier ‐ Measures the potential amount of money that the banking system generates with each dollar of reserves. [Source: Sexton Exploring Economics, 5th edition]

17 Handout: Monetary Institutions 1 The most important disadvantage of using commodities as money is that they D_ _ _ _ _ _ _ _ _ _ easily after a few trades. 2. C_ _ _ _ _ _ _ consists of coins and/or paper that some institution or government has created to be used in the trading of goods and services and the payment of debts. 3. Legal tender is F _ _ _ money. 4. Assets in checking accounts in banks are more formally called D _ _ _ _ _ deposits. 5. Demand deposits are deposits in banks that can be W _ _ _ d _ _ _ _ on demand by simply writing a check. 6. D _ _ _ _ _ deposits are assets that can be easily converted into currency or used to buy goods and services directly. 7. D _ _ _ _ _ deposits and O _ _ _ _ _ C h e c _ _ _ _ _ deposits have replaced paper and metallic currency as the primary source of money used for transactions in the United States. 8. Transaction deposits are a popular monetary instrument precisely because they lower T _ _ _ _ _ _ _ _ _ _ costs compared with the use of metal or paper currency. 9. Credit card payments are actually guaranteed L _ _ _ _, which merely defer customer payment. 10. Credit cards are not money; they are S u b _ _ _ _ _ _ _ _ for the use of money in exchange. 11. N _ _ _ _ _ _ _ _ _ _ _ _ _ deposits are fund accounts against which the depositor cannot directly write checks. 12. Two primary types of non transaction deposits exist: S _ _ _ _ _ _ accounts and T _ _ _ deposits. 13. Assets that can be quickly converted into money are considered highly L _ _ _ _ _ assets. 14. Money market mutual funds are considered N _ _ _ money because they are relatively easy to convert into money for the purchase of goods and services. 15. M _ includes M1, plus saving accounts, time deposits (except for some large‐ denomination certificates of deposit), and money market mutual funds. 16. GRES _ _ _’ _ Law states that “cheap money drives out dear money.” 17. Something is money only if people will generally Acc _ _ _ it. 18. Our money is money because of confidence that we have in P r i _ _ _ _ F i n _ _ _ _ _ _ institutions as well as in our G _ _ _ _ _ _ _ _ _. 19. The primary function of money is to serve as a M _ _ _ _ _ of E _ _ _ _ _ _ _.

18 20. The more complex the economy, the Gr _ _ _ _ _ the need for one or more universally accepted assets serving as money. 21. Money is both a St _ _ d _ _ d of value and a St _ r _ of value. 22. With money, a common Yard S _ _ _ k exists, as that the values of diverse goods and services can be precisely compared. 23. The value of money fluctuates far L _ _ _ then the value of many individual commodities. 24. The biggest players in the banking industry are C _ _ _ _ _ _ _ _ _ B _ _ ks. 25. Aside from commercial banks, the banking system includes two other important financial institutions: S a _ _ _ _ _ and Lo _ _ A _ _ _ _ _ _ _ _ _ _ _ and C _ _ _ _ _ U _ _ _ _ _. 26. Most important, financial institutions are D _ pos _ _ _ _ _ _ _ for savings and liquid assets that are used by individuals and firms for transaction purposes. 27. In making loans, financial institutions act as intermediaries between L _ _ _ _ _ _, (Savers) who supply funds, and B _ _ _ _ _ _ _ _ seeking funds to invest. 28. If you go into a bank and borrow $1,000, the bank will probably simply A _ _ to your checking account at the bank. 29. Banks make their profit by collecting H _ _ _ _ _ interest payments on the loans they make than they pay their own depositors for those funds. 30. The Federal Reserve System’s R _ _ _ _ _ _ R _ _ _ _ _ _ _ _ _ _ requires banks to keep on hand a quantity of cash or reserve accounts with the Federal Reserve equal to some fraction of their checkable deposits. 31. Our banking system is sometimes called a F _ _ _ _ _ _ _ _ _ R _ _ _ _ _ _ system because banks find it necessary to keep cash on hand and reserves at the Federal Reserve equal to some fraction of their checkable deposits. 32. Money is created when banks M _ _ _ L _ _ _ _. 33. The largest asset item for most banks is L _ _ _ _. 34. Most banks keep a majority of their reserves as R _ _ _ _ _ _ A _ _ _ _ _ at the Federal Reserve. 35. Checking account deposits and time deposits constitute L _ _ b _ l_ t _ _ _ of banks. 36. Any time the aggregate amount of bank A _ _ _ _ _ changes, the aggregate amount of liabilities and capital must also change by the same amount, by definition. 37. Required reserves equal D_ _ _ _ _ _ _ times the R _ _ _ _ _ _ _ R _ _ _ _ _ _ R _ _ _ _ . 39. The monetary expansion of an individual bank is limited to its E _ _ _ _ _ reserves. 40. Potential money creation from a cash deposit equals that initial deposit times the M _ _ _ _ M _ _ _ _ _ _ _ _ _ . [Source: Sexton Exploring Economics, 5th ed]

19 Lesson Plan: The Federal Reserve and Monetary Policy Concept: The Federal Reserve System is fundamental to the U.S. Monetary Policy. In this chapter, the students will be introduced to some general concepts regarding the Federal Reserve System and Monetary Policy such as: what are the functions of the Fed; who controls the Fed; what is the relationship between the Fed and congress; how does the Fed change the money supple; how money, interest rates and aggregate demand interact; what is expansionary monetary policy; what is contractionary monetary policy; what is the equation of exchange; and problems in implementing Monetary Policy Core Student Success Skills: Communication, Collaboration, Organization, Critical Thinking, and Self‐Assessment Learning Objectives: After successfully completing this activity, students will able to:

• List the six functions of a central bank

• Explain how the Federal Reserve changes the Money Supply through Open Market Operations, the Reserve Requirement, and the Discount Rate

• Discuss how the Federal Reserve increases and decreases the Money Supply and difficulties in controlling the Money Supply

• Identify the determinants of the Demand for money

• Describe the Money Market and Money Market equilibrium

• Identify the relationship between bond prices and the interest rate

• Explain both expansionary and contractionary monetary policy

• State what the equation of exchange is and describe the velocity of money

• Examine problems in implementing monetary policy

• Design concept maps about the Federal Reserve System and Monetary Policy using the guide provided by the instructor

• Develop group concept maps about the Federal Reserve System and Monetary Policy

Materials: Textbook: Exploring Microeconomics, 5th edition by Robert L. Sexton, Thomson South‐Western with Aplia Resources: In Plain English: Making Sense of The Federal Reserve ‐ A virtual tour‐ lesson plan. The FRB of St Louis provides a lesson plan, DVD, student booklets, and student exercises (fill‐in the blanks, word scramble, a crossword puzzle, and a word scramble).

20 Web Resources:

• http://www.stlouisfed.org/inplainenglish/

• www.federalreserve.gov

• www.federalreserve.gov/aboutthefed

• www.federalreserve.gov/monetarypolicy

• www.frbatlanta.org/resources/classroomeconomist

• www.treasury.gov

• http://www.khanacademy.org/finance‐economics/macroeconomics/v/monetary‐and‐fiscal‐policy

• http://www.khanacademy.org/finance‐economics/macroeconomics/v/money‐supply‐and‐demand‐impacting‐interest‐rates

• http://www.khanacademy.org/finance‐economics/banking‐and‐money/v/banking‐13‐‐open‐market‐operations

• http://www.khanacademy.org/finance‐economics/banking‐and‐money/v/banking‐13‐‐open‐market‐operations

Procedure:

1. Students will first complete a KWL Chart seeking to find out what they know about the Federal Reserve System and Monetary Policy and what they want to learn about Federal Reserve System and Monetary Policy. (They will complete the chart for homework).

2. Students will watch a video from the Federal Reserve Bank of St. Louis: http://www.stlouisfed.org/education_resources/inplainenglishvideo.cfm.

3. Students will watch videos from: www.khanacademy.org/. 4. The instructor will lecture the subject accompanied by the PowerPoint presentation. 5. The instructor will discuss: 1. The structure of the Federal Reserve System; 2. How the Fed

changes the money supply; 3. Money, interest rates and aggregate demand; 4. Expansionary and contractionary monetary policies; 5. Money and inflation; 6. Problems in implementing monetary policy.

6. Students will discuss the role of the Federal Reserve System, and learn basic economic concepts of monetary policy.

7. The instructor will explain the concept map for the topic – Federal Reserve System and Monetary Policy.

8. Students will draw their individual concept maps following the instructions from the guide. 9. Students will form groups of four and they will draw a collective concept map. 10. Students will do class exercises: crossword puzzle; fill‐in the blanks; participate in a jeopardy

game.

21 SOFT SKILLS: Identify the importance and improve these Basic Skills:














Next Steps: Lessons learned will be used in future modules on Macroeconomic Issues. Assessment: The instructor will assess the students’ learning through the use of class exercises: crossword puzzles, fill‐in the blanks, and a jeopardy game.

22 Handout: Federal Reserve System and Monetary Policy KWL Chart Name: ______________________ What I Know: What I Want to know: What I Learned:

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Class Handout: The Federal Reserve System and Monetary Policy Terms Open Market Operations ‐ The purchase and sale of U.S. government bonds by the Federal Reserve System. Discount Rate ‐ Interest rate that the Fed charges commercial banks for the loans it extends to them. Federal Funds Market ‐ The market in which banks provide short‐term loans to other banks that need cash to meet reserve requirements. Money Market ‐ The market in which money demand and money supply determine the equilibrium interest rate. Equation of Exchange ‐ The money supply (M) time velocity (V) of circulation equals the price level (P) time quantity of goods and services produced in a given period (Q). Velocity of Money ‐ A measure of how frequently money is turned over; the intensity with which money is used. Quantity Theory of Money and Prices ‐ A theory of the connection between the money supply and the price level when the velocity of money is constant. [Source: Exploring Macroeconomics, Sexton 5th ed.]

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Class Handout: Student Guide to Sexton’s Exploring Macroeconomics

The Federal Reserve System and Monetary Policy Outline I. The Federal Reserve System

• Topics: The Functions of a Central Bank; The Location of the Federal Reserve System; The Fed’s Relationship to the Federal Government and its ties to the Executive Branch. Section checks:

• Of the six major functions of a central bank, the most important is its role in regulating the money supply.

• The Federal Reserve System consists of 12 Federal Reserve banks. Although these banks are independent institutions, they act largely in unison on major policy decisions.

• The Federal Reserve Board of Governors and the Federal Open Market Committee are the prime decision makers for U.S. monetary policy.

• The president of the United States appoints members of the Federal Reserve Board of Governors to a 14‐year term, with only one appointment made every two years. The president also selects the Chair of the Federal Reserve Board, who serves a four‐year term. The only other government intervention in the Fed can come from legislation passed in Congress.

II. How Does the Federal Reserve Change the Money Supply?

• Topics: Open Market Operations; the Reserve Requirement; the Discount Rate; the Difficulties in Controlling the Money Supply. Section checks:

• The three major tools of the Fed are open market operations, changing reserve requirements, and changing the discount rate.

• If the Fed wants to stimulate the economy (increase aggregate demand), it will increase the money supply by buying government bonds, lowering the reserve ratio, and/or lowering the discount rate.

• If the Fed wants to restrain the economy (decrease aggregate demand), it will lower the money supply by selling government bonds, increasing the reserve ratio, and/or raising the discount rate.

III. Money, Interest Rates, and Aggregate Demand

• Topics: The Money Market; The Demand for Money and the Nominal Interest Rate; Why is the Supply of Money Relatively Inelastic?; Money Market Equilibrium; How do Income Changes Affect the Equilibrium Position?; How Would an Increase in the Money Supply Affect Equilibrium Interest Rates and Aggregate Demand?; Does the Fed Target the Money Supply or Interest Rates?; Which Interest Rate does the Fed Target?; Does the Fed Influence the Real Interest in the Short Run?

Section checks: • The money market is the market where money demand and money supply determine the

equilibrium interest rate.

• The three primary reasons for the demand for money are transaction purposes, precautionary reasons, and asset purposes.

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• The quantity of money demanded varies inversely with interest rates (a movement along the money demand curve) and directly with income (a shift of the money demand curve). Monetary policies that increase the supply of money will lower the interest rates in the short run, other things being equal.

• Rising incomes increase the demand for money and lead to a new, higher equilibrium interest rate, other things being equal.

• The supply of money is effectively almost perfectly inelastic with respect to interest rates over their plausible range, as controlled by Federal Reserve policies.

• Money market equilibrium occurs at the intersection of the money demand and money supply curves. At the equilibrium nominal interest rate, the quantity of money demanded equals the quantity of money supplied.

• When the Fed sells bonds to the private sector, bond purchasers take the money out of their checking accounts to pay for the bonds, and those banks’ reserves are reduced by the size of the check. This reduction in bank reserve leads to a reduction in the money supply, which in turn leads to a higher interest rate and reduction in aggregate demand, at least in the short run.

• When the Fed buys bonds, bond sellers will likely deposit their check from the Fed in their banks and the money supply will increase. The increase in the money supply will lead to lower interest rates and an increase in aggregate demand.

• An inverse relationship between the interest rate and the price of bonds means that when the price of bonds rises (falls) the interest rate falls (rises).

• A change in the nominal interest rate tends to change the real interest rate by the same amount in the short run.

• The Fed signals its intended monetary policy though the federal funds rate target it sets.

IV. Expansionary and Contractionary Monetary Policy

• Topics: Expansionary Monetary Policy in a Recessionary Gap; Contractionary Monetary Policy in an Inflationary Gap; Monetary Policy in an Open Economy. Section checks:

• An expansionary monetary policy at less than full employment can cause an increase in real GDP and price level.

• An expansionary monetary policy at full employment can temporarily increase the real GDP, but in the long run, only the price level will rise.

V. Money and Inflation

• Topics: The Inflation Rate and the Growth in the Money Supply; The Equation of Exchange; Section checks:

• The equation of exchange is expressed as M x V = P x Q, where M is the money supply, V is the velocity of money, P is the average level of prices of final goods and services, and Q is real GDP in a given year.

• The velocity of money (V) represents the average number of times that a dollar is used in purchasing final goods and services in a one‐year period.

• The equation of exchange is a particularly useful tool when analyzing the effects of a change in the money supply on the price level or inflation rate in the aggregate economy.

26 VI. Problems in Implementing Monetary and Fiscal Policy

• Topics: Problems in Conducting Monetary Policy; How do Commercial Banks Implement the Fed’s Monetary Policies?; Banks that are not Part of the Federal Reserve System and Policy Implications; Fiscal and Monetary coordination Problems; Alleviating Coordination Problems; Imperfect Information; Overall problems with Monetary and Fiscal Policy. Section checks:

• Monetary policy faces somewhat different implementation problems from those faced by fiscal policy. Both face difficult forecasting and lag problems; however, the Fed can take action much more quickly. But its effectiveness depends largely on the reaction of the private banking system to its policy changes, and its intended effects can be offset by global and nonbank financial institutions, over which the Fed lacks jurisdiction.

• In the United States, monetary and fiscal policy are carried out by different decision makers, thus requiring cooperation and coordination for effective policy implementation.

• An aggregate demand shift in the flat portion of the SRAS curve will result in a large change in RGDP and a small change in the price level.

• An aggregate demand shift in the steep portion of the SRAS curve will result in a small change in RGDP and a large change in the price level.

[Source: Exploring Macroeconomics, 5th ed. Sexton]

27 Handout: Federal Reserve and Monetary Policy 1. In most countries, the job of manipulating the supply of money belongs to the C _ _ _ _ _ _ B _ _ _. 2. Effective control of the major monetary policy decisions rests with B _ _ _ _ of G _ _ _ _ _ _ _ _ and the F_ _ _ _ _ _ O _ _ _ M_ _ _ _ _ _ C_ _ _ _ _ _ _ _of the Federal Reserve System. 3. The Federal Reserve was created in 1913 because the U.S. banking system had little S _ _ _ _ _ _ _ and no C _ _ _ _ _ _ direction. 4. F_ _ _ _ _ _ O _ _ _ M_ _ _ _ _ _ C_ _ _ _ _ _ _ _of the Federal Reserve System consists of the seven members of the Board of Governors, the president of the New York Federal Bank, and four other presidents of Federal Reserve banks, who serve on the committee on a rotating basis.. 5. Perhaps the most important function of the Federal Reserve is its ability to regulate the M _ _ _ _ _ S _ _ _ _ _ . 6. The quantity equation of money can be presented as: M x __ = P x __. 7. V _ _ _ _ _ _ _ represents the average number of times that a dollar is used in purchasing final goods and services in a one‐year period 8. If M increases and V remains constant, the P must I _ _ _ _ _ _ , Q must I _ _ _ _ _ _ _ _ , or P and Q must each I _ _ _ _ _ _ _ . 9. Expanding the money supply, other things being equal, will have a similar impact on aggregate demand as I _ _ _ _ _ _ _ _ _ government spending or R_ _ _ _ _ _ _ taxes. 10. Some economists, often called M _ _ _ _ _ _ _ _ _ _ , believe that monetary policy is the most powerful determinant of macroeconomic results. 11. An increase in the interest rate will cause people to hold L _ _ _ money, which, in turn, means that the velocity of money I _ _ _ _ _ _ _ _ . 12. Higher rates of anticipated inflation would tend to I _ _ _ _ _ _ _ velocity. 13. The inflation rate tends to rise M _ _ _ in periods of rapid monetary expansion 14. The fed has three major methods that it can use to control the supply of money: It can engage in O _ _ _ M _ _ _ _ _ operations, change the R_ _ _ _ _ _ requirements, or change its D _ _ _ _ _ _ _ rate. . 15. O _ _ _ M _ _ _ _ _ O _ _ _ _ _ _ _ _ _ are by far the most important device used by the Fed to influence the money supply. 16. Open Market Operations involve the purchase or sale of G _ _ _ _ _ _ _ _ S _ _ _ _ _ _ _ _ _ by the F _ _ _ _ _ _ R _ _ _ _ _ _ S _ _ _ _ _. 17. When the Fed buys government bonds in an open market operation, it I _ _ _ _ _ _ _ the money supply.

28 18. When the Fed sells government bonds in an open market operation, it D_ _ _ _ _ _ _ the money supply. 19. The most a bank can lend out at a given time is equal to its E _ _ _ _ _ R _ _ _ _ _ _ _. 20. If the Fed L _ _ _ _ _ reserve requirement, other things being equal, it will create excess reserves in the banking system. 21. An increase in the required reserve ratio would result in a D _ _ _ _ _ _ _ in the money supply 22. Small reserve requirement changes have a B _ _ impact on the potential supply of money. 23. Banks having trouble meeting their reserve requirement can borrow reserves directly from the Fed at an interest rate called the D _ _ _ _ _ _ _ rate. 24. If the Fed raises the discount rate, it makes it M_ _ _ costly for banks to borrow funds to meet their reserve requirement, which will result in F _ _ _ _ new loans being made and L _ _ _ money created. 25. If the FED wants to expand the money supply, it will L _ _ _ _ the discount rate. 26. When banks have short term needs for cash to meet reserve requirements, they are more likely to take a short‐term (often overnight) loan from other banks in the F _ _ _ _ _ _ F _ _ _ _ market than to borrow reserves directly from the Fed. 27. The Fed can do three things if it wants to reduce the money supply: S _ _ _ government bonds, R _ _ _ _ reserve requirements, or R _ _ _ _ the discount rate. 28. An increase in the money supply would tend to R _ _ _ _ nominal GDP. 29. People have three basic motives for holding money instead of other assets: for T _ _ _ _ _ _ _ _ _ _ purposes, P _ _ _ _ _ _ _ _ _ _ _ _ reasons, and A _ _ _ _ purposes. 30. The quantity of money demanded varies I _ _ _ _ _ _ _ _ with the rate of interest. 31. If the price level falls, buyers will need L _ _ _ money to purchase their goods and services. 32. An increase in the money supply will lead to L _ _ _ _ interest rates and an I _ _ _ _ _ _ _ in aggregate demand. 33. When the Fed sells bonds, it L _ _ _ _ _ the price of bonds, R _ _ _ _ _ interest rates, and R _ _ _ _ _ _ aggregate demand in the short run. 34. If the demand for money increases, but the Fed does not allow the money supply to increase, interest rates will R _ _ _ , and aggregate demand will F _ _ _ . 35. When the economy grows, the Fed would have to I _ _ _ _ _ _ _ the money supply to keep interest rates from rising. . 36. A contractionary policy can be thought of as a D _ _ _ _ _ _ _ in the money supply or a I _ _ _ _ _ _ _ in the interest rate.

29 37. The real interest rate is equal to the N _ _ _ _ _ _ I _ _ _ _ _ _ _ R _ _ _ minus the E _ _ _ _ _ _ I _ _ _ _ _ _ _ R _ _ _ . 39. If the reserve requirement is 10 percent, a total of up to _ _ _ , _ _ _ in new money is potentially created by the purchase of $10,000 of government bonds by the Fed. 40. Decision making with respect to Fiscal Policy is made by C _ _ _ _ _ _ _ and the P _ _ _ _ _ _ _ _ , while monetary policy decision making is in the hands of the F _ _ _ _ _ _ R _ _ _ _ _ _ S _ _ _ _ _ . [Source: adapted from Exploring Economics, Sexton 6th ed]

30 Lesson Plan: The National Debt Concept: The federal budget process suffers from a variety of problems, and our borrowing is at close to an all time high. Deficits increase during wars and severe recessions, but deficits remained high during the economic expansions of the 1980s. Those deficits arose from a combination of tax cuts during the early 1980s and growth in federal spending to the extent that deficits crowd out private capital formation, this decline in private investment reduces the economy’s ability to grow. This is one cost of deficit spending. Foreign holdings of debt also impose a burden on future generations because debt payments go to foreigners. Thus, the deficits of one generation of Americans can reduce the standard of living of the next. Our mounting debt problem should be a major concern for the younger generation, as they will be faced with correcting the problem, or living with less as the debt repayment will result in the government not being able to afford programs enjoyed by past generations. Students will look at Fiscal policy and the National Debt, and try to prepare for life with reduced governmental programs – being self aware and planning for reduced benefits will help them prepare for the future. Core Student Success Skills: Self‐Assessment, Organization, Critical Thinking Learning Objectives: After successfully completing this activity, students will be able to

• Explain the theory of fiscal policy The tools of fiscal policy are automatic stabilizers and discretionary fiscal measures. Automatic stabilizers, such as the federal income tax, once implemented, operate year after year without congressional action. Discretionary fiscal policy results from specific legislation about government spending, taxation, and transfers.

• Describe how aggregate supply affects fiscal policy An expansionary fiscal policy can close a contractionary gap by increasing government purchases, reducing net taxes, or both. Because the short‐run aggregate supply curve slopes upward, an increase in aggregate demand raises both output and the price level in the short run. A contractionary fiscal policy can close an expansionary gap by reducing government purchases, increasing net taxes, or both. Fiscal policy that reduces aggregate demand to close an expansionary gap reduces both output and the price level.

• Discuss the evolution of fiscal policy Fiscal policy focuses primarily on the demand side, not the supply side. The problems of the 1970s, however, resulted more from a decline of aggregate supply than from a decline of aggregate demand, so demand‐side remedies seemed less effective. The tax cuts of the early 1980s aimed to increase aggregate supply. But government spending grew faster than tax revenue, creating budget deficits that stimulated aggregate demand. These huge deficits discouraged additional discretionary fiscal policy, but success in erasing deficits in the late 1990s spawned renewed interest in discretionary fiscal policy, as reflected by President Bush’s tax cuts in the face of the 2001 recession.

• Examine the federal budget process The federal budget is a plan of outlays and revenues for a specified period, usually a year. The federal budget process suffers from a variety of problems, including overlapping committee jurisdictions, lengthy budget deliberations, budgeting by

31

continuing resolutions, budgeting in too much detail, failure to distinguish between operating costs and capital costs, and a lack of control over most of the budget.

• Explain the national debt The federal or national debt is a stock variable measuring the net accumulation of past deficits, the amount owed by the federal government. Most recently the U.S. federal debt measured relative to GDP was about average for major industrial countries and was relatively low compared to U.S. historical levels and the federal debt is projected to grow as federal deficits worsen.

Materials:

• Textbook

• PowerPoint Lecture Notes

• Internet Research

• YouTube Video

Procedure: Students will:

1. Participate in lecture format on fiscal policies – both past and present. 2. Review the procedures for developing our national budget. 3. Participate in a round table discussion on spending, including entitlements such as Medicare and

Social Security. 4. Watch the video IOUSA 9Link: http://www.youtube.com/watch?v=O_TjBNjc9Bo). 5. Watch the updated 1 hour updated PBS Frontline updated version "Ten Trillion and Counting":

Link: http://www.pbs.org/wgbh/pages/frontline/tentrillion/view/ . 6. Discuss the debt as it accumulates‐‐Link: http://www.usdebtclock.org/. 7. Answer the questions in the National Debt handout (see below).

32 SOFT SKILLS: Identify the importance of and improve these skills:


• Writing ‐ communicates thoughts, ideas, information, and messages in writing; and creates documents such as letters, directions, manuals, reports, graphs, and flow charts

• Arithmetic/Mathematics ‐ performs basic computations and approaches practical problems by choosing appropriately from a variety of mathematical techniques



Identify the importance and improve these Thinking Skills:


• Decision Making ‐ specifies goals and constraints, generates alternatives, considers risks, and evaluates and chooses best alternative

• Problem Solving ‐ recognizes problems and devises and implements plan of action



Next Steps:

• Discuss the students’ retirement options, and evaluate how they will plan to retire comfortably in light of this mounting debt:

• Determine how many years you need to work until you retire, and determine how much capital you need to accumulate for retirement by using an investment returns calculator.

• Prepare a “what if” analysis spreadsheet, so that you may change your investment and assumptions.

• Use an online retirement planner calculator to determine if you will have enough money to retire.

• Develop a detailed excel spreadsheet to budget for a retirement plan that will sustain a good standard of living. The budgeted investments must be realistic, and based on a reasonable discretionary income contribution.

• Develop a written, comprehensive timeline, as well as a written narrative on how much you will contribute to a plan, and how much you will accumulate for retirement.

33 Handout: National Debt 1. 5 Points 100 Words minimum: What are the 3 most important things you learned from the IOUSA video? 2. 5 Points 100 Words minimum: In IOUSA, we learned about the national debt, and how it impacts us today as well as future generations. In the updated Ten Trillion and Counting video, what has happened since President Obama took over for President Bush? Have these problems been rectified, or are they more severe? Why? 3. 5 Points 100 Words minimum: Please go to http://www.usdebtclock.org/‐ and look at our national debt, and GDP. What do these numbers mean to you? Please look at some other staggering (climbing!) numbers ‐ comment on at least one other figure you see that alarms you, and why. 4. 5 Points 100 Words minimum: Consider your age, your family situation, your employment status, and where you are in your educational endeavors. What does the current state of our national debt mean to you? Depending on your lot in life, the debt has different implications to everyone. Baby boomers retiring today are getting social security ‐ how will you retire? What does the debt mean to future generations, or your children (if you have them, or are planning to have them)? 5. 5 Points 100 Words minimum: What do you think will happen with the debt? Will taxes rise during your lifetime? What do you see happening to our currency? If you were the President, what would you do to correct this problem?

34

Lesson Plan: Economic Essays The Big Issues Concept: The purpose of these essays is to explore major trends and issues that affect the economy but that may not always be directly covered in a Macroeconomics course. Each topic involves watching one or more video clips and documentaries and then writing about the issues raised in a critically reflective way. For each essay, students should plan to spend about 1‐2 hours watching the videos and taking notes, followed by 2‐3 hours writing the essay. The essays should be formatted more as a report than a traditional English essay and be edited down to a maximum of 2 pages, single‐spaced, with headings and subheadings. Emphasis is on the quality of thought, organization, and presentation rather than quantity pages filled. Description and Context In 2008, the U.S. experienced the biggest economic and financial crisis since the Great Depression of the 1930s. The origins of the crisis could be traced back several decades and involves a number of factors and causes. The economy seems to have recovered to a moderate level of growth but significant after effects, such as depressed housing and long‐term unemployment, remain. The economy continues on major life support from both the federal government, in the form of deficit spending, and the Federal Reserve, in the form of low interest rates and quantitative easing (“printing money”). In addition, many of the underlying structural and behavior issues have not been dealt with or have returned to business as usual. A once‐in‐a‐lifetime crisis like this provides a rare opportunity to gain insights into how the economy works and learn life lessons for the short and long‐term future both for each of us individually and for all of us as a nation. Core Student Success Skills: Critical Thinking, Communication Learning Objectives: After successfully completing this activity, students will able to

• Provide a timeline of events that led to the financial crisis of 2008, beginning with the 9/11/2001

• Identify the roles played by various actors (homeowners, banks, government, etc.)

• Identify the underlying causes, behaviors, etc

• Assign or allocate blame or responsibility for what happened and the responses to it

• Describe how the financial crisis has affected you and your family, friends, neighbors, and community

• Reflect on how you see the economy and the world differently as a result of watching the video(s)

• Raise questions that may be left unanswered both for you individually and for the country

• Discuss lessons learned both for you individually and for the country

• Propose approaches or solutions for the future, both ideal and practical

Topics and Issues Covered (3‐6 of these will be developed)

• Origins of The Great Recession: Housing and Credit

• The National Debt: Origins, Components, and Solutions

35

• Fixing Health Care: Political Challenges and Alternative Approaches

• Globalization: Production, Consumption, and Employment

• Energy and the Environment: Challenges and Opportunities

• Technology and Innovation: Past, Present, and Future














Procedure:

1. Plan to spend 1‐2 hours watching the videos and taking notes, followed by 2‐3 hours writing the essay. Watch at least one of the following documentaries and take notes:

• CNBC: House of Cards (more general and covers 2000‐2008) http://www.hulu.com/watch/59026/cnbc‐originals‐house‐of‐cards

• FRONTLINE: Inside the Meltdown (more detailed and covers 2008) http://www.pbs.org/wgbh/pages/frontline/meltdown/view/

• FRONTLINE: Video Timeline of Financial Deregulation (most technical and covers 3 decades) http://www.pbs.org/wgbh/pages/frontline/warning/cron/ 2. Write an essay that addresses the Learning Objectives outlined above. Use both outline and

paragraph styles as appropriate (for example, outlining for the timeline of events). 3. Use a maximum of two pages, single spaced with headings and subheadings (blank lines

before headings and between paragraphs is helpful). The goal is quality rather than quantity (how much you can say in two pages). See the table that describes how the essay will be evaluated and graded in the previous section.

36

Assessment Rubric for Evaluation and Grading Critical Thinking Written Communication Minimal Level (Grade of D)

Lists most of what happened or what is important, but some events or points are left out or inconsistently covered in terms of significance Expresses opinions

Evidence of some proofing but grammatical and spelling problems remaining Writing is somewhat organized and fairly coherent

Satisfactory (Grade of C)

Lists most of the important events and points in a fairly comprehensive and consistent manner Identifies and discusses some of the major overarching themes or issues Raises questions, expresses points of view, and attempts to propose solutions

Evidence of proofing that leaves only minor grammatical and spelling issues Uses both outline and paragraphs styles Writing is coherent and organized with the use of headings

Good (Grade of B)

Covers the important events and points in a comprehensive and consistent manner Identifies and discusses the major overarching themes or issues Connects the topic with other course materials or class lectures and discussions Raises original questions, expresses multiple positions, and proposes solutions with solid arguments Demonstrates thoughtful reflection, analysis and the development of new insights and perspectives

Evidence of proofing that eliminates grammatical and spelling issues Uses both outlines and paragraphs styles effectively and appropriately Writing is coherent and well organized with the use of headings and subheadings Edited for quality rather than quantity

Excellent (Grade of A)

Covers the important events and points in a comprehensive and consistent manner Identifies and discusses the major overarching themes or issues, including the underlying structural concepts or philosophical principles Raises thoughtful questions and proposes creative solutions with logical and reasoned arguments from a variety of perspectives Demonstrates critical, in‐depth thinking, analysis, and synthesis of the issues involved and the development of unique insights that contribute to the advancement of thought in the field

Evidence of editing and proofing that eliminates grammatical and spelling issues Uses both outlines and paragraphs styles effectively and appropriately Writing is coherent and well organized with the use of headings and subheadings Edited for quality, conciseness, and creativity of expression

37 At least two more of these will be developed based on the template above. The National Debt: Origins, Components, and Solutions

• FRONTLINE: Ten Trillion and Counting (which covers the recession and the debt crisis up until about 2010)

Fixing Health Care: Political Challenges and Alternative Approaches

• FRONTLINE: Sick Around the World (compares health care systems of 5 countries to the US)

• FRONTLINE: Obama’s Deal (behind the scenes politics of health care reform)

Globalization: Production, Consumption, and Employment

• FRONTLINE: Is Wal‐Mart Good for America (about 60 min.)

• CNBC: Trash Inc. ‐ The Secret Life of Garbage (about 45 min.)

• IBM Think Forum: Thomas Friedman – Hyperconnected World (32 minutes)

• Apple iPhone production at Foxconn plant in China

• Diamond mining in Africa

Energy and the Environment: Challenges and Opportunities

• INTERVIEW: Author of The End of Growth on the Keiser Report (3/2011, 13 min)

• NOVA: The Big Energy Gamble [55 minutes]

• Electric Cars and the Grid (10 min)

Technology and Innovation: Past, Present, and Future

• BLOOMBERG: Risk Takers: Elon Musk (PayPal, Tesla, SolarCity, Space X)

• TED: Bill Gates – Energy Innovation [20 minutes]

• CNBC: Inside the Mind of Google (2010)

• TED: Kevin Kelley on How Technology Evolves (2005) [20 min]

Assessment: The essay will serve as the assessment artifact.

38 Lesson Plan: International Trade Concept: International economics is concerned with allocation of economic resources among countries. Such allocation is done in the world markets by means of international trade. In this chapter, the students will be introduced to some general concepts of international trade which will serve as a basis for the further examination of international trade. Also the students will examine the global rules of trade between nations. Core Student Success Skills Addressed: Critical Thinking, Organization Learning Objectives: After successfully completing this activity, students will be able to:

• Explain the reasons why nations trade

• Illustrate the concept of comparative advantage and absolute advantage

• Label and explain the tools used by governments to influence international trade and protect domestic industries from foreign competition (quotas, tariffs and other import barriers)

• List the institutions and agreements with high importance for international trade (WTO, NAFTA, APEC, DR‐CAFTA)

• Explain the concept of globalization

• Explain how international trade affects them as a consumer, producer and voter

• Fill in the crossword puzzle

Materials: Textbook: Exploring Macroeconomics, 5th edition by Robert Sexton Procedure:

1. The students will watch a video about the international trade http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm.

2. The instructor will lecture the subject accompanied by the PowerPoint presentation. 3. Students will discuss the current state of the US economy, and learn basic economic

concepts of international trade. 4. Students will watch short videos about the international institutions and organizations that

have an important role in international trade. http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm http://www.census.gov/foreigntrade/aes/exporttraining/videos/uscs_videos/NAFTA_basics/index.html

5. The instructor will explain the task of completing the crossword puzzle. 6. Students will fill in their crossword puzzle using their notes.

39 SOFT SKILLS: Identify the importance and improve these Basic Skills:








• Synthesis – filling out a crossword puzzle


• Evaluation and Self‐evaluation – asses, justify

Next Steps: Lessons learned revolving international trade will be used in future modules on the international economics. Assessment: The instructor will assess the students’ learning using the crossword puzzle.

Handout: International Trade Crossword

1 I M P O R T S

2 R E V E N U E

3 N A F T A

4 A B S O L U T E

5 T A R I F F

6 I N F A N T

7 A P E C

8 Q U O T A

9 C O M P A R A T I V E

10 O U T S O U R C I N G

11 D U M P I N G

12 E M B A R G O

13 G L O B A L I Z A T I O N

14 D R _ C A F T A

15 W T O

16 R E S O U R C E S

17 L A B O R

18 S U B S I D I E S

19 E X P O R T

1. A trade deficit occurs when imports are large relative to exports.

2. Tariffs provide revenue to the government.

3. The North American Free Trade Agreement or NAFTA is an agreement signed by the

governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.

4. An absolute advantage occurs when one producer can do a task using fewer inputs than the

other producer.

5. A tariff is a tax that is imposed on a good when it is imported.

6. The argument that it is necessary to protect a new industry to enable it to grow into a mature

industry that can compete in world markets is called The infant industry argument.

7. Asia‐Pacific Economic Cooperation or APEC is a forum for 21 Pacific Rim countries (styled

"Member Economies") that seeks to promote free trade and economic cooperation throughout the Asia‐Pacific region.

8. An import quota is a quantitative restriction on the import of a good that limits the maximum

quantity of a good that may be imported in a given period.

9. We can define national comparative advantage as the ability of a nation to perform an activity

or produce a good or service at a lower opportunity cost than any other nation.

10. Offshore outsourcing ‐ many jobs that were once considered safe from foreign competition

have been moved abroad.

11. Dumping occurs when a foreign firm sells its exports at a lower price than its costs of

production.

12. An embargo is a law that bars trade with another country.

13. Foreign trade, like other economic linkages between countries, has been growing rapidly, a phenomenon called globalization.

14. The Dominican Republic – Central America Free Trade Agreement, commonly called CAFTA, is a

free trade agreement.

15. The World Trade Organization also known as WTO is an organization that intends to supervise

and liberalize international trade.

16. One reason why nations trade is because the distribution of natural, human and capital

resources among nations is uneven.

17. Protection in international trade, allows us to compete with cheap foreign labor.

18. Sometimes governments try to encourage exports by subsidies. The producer will export goods

not because their costs are lower than those of a foreign competitor but because their costs have been artificially reduced by government action, transferring income from taxpayers to the exporter.

19. Balance of trade represents a difference in value for import and export for a country.

Appendix: Sample Course Syllabi MIDDLESEX COMMUNITY COLLEGE

ECO 140 Principles of Macroeconomics John Femia

Phone Number 978 656‐3173 E‐Mail: [email protected]

Lowell City Building Office #10 Office Hours

By Appointment COURSE DESCRIPTION This course is an introduction to the theory of income determination, business cycles, national income analysis and economic growth. The role of labor and capital markets in economic activity is examined to explore the problems of unemployment and inflation. The functioning and impact of the monetary system is introduced. Government stabilization activity utilizing monetary and fiscal policy is explored. The mechanics of international goods transactions and the balance of trade, as they influence the domestic economy are examined. This course satisfies a Social Science Elective and also the Values/Ethics/Social Policy Intensive Value. Pre‐requisites: Placement above or successful completion of EN 2103, eligible for EN 1103, a minimum of one year of high school algebra or completion of MA 1103 or placement into MA 1104 Recommendation: Current enrollment in EN 2122 or EN 2131 if CPT reading placement test is between 68 & 75. INSTRUCTIONAL MATERIALS: TEXTBOOK ECON Macro William A. McEachern ISBN‐10: 1439040672 ISBN‐13: 9781439040676 © 2010 KNOWLEDGE, SKILLS, AND GOALS: The student will learn to:

• Describe and differentiate between different types of Markets

• Identify the different types of competition in the marketplace and evaluate competitive advantages and disadvantages in particular industries.

• Evaluate the role of government in regulating industries.

• Assess Anti Trust laws and evaluate how they affect our economy

• Define Price theory, specifically Market Supply and Demand

• Differentiate between Change in Demand and Change in Quantity Demanded

• Describe why a business would invest in Productivity and Technology

• Define Business Cycles, and recognize where our economy is and has been in the Business Cycle and why at different times in history

• Define the 3 types of Unemployment and explain what unemployment means to wages

• Explain the consequences of inflation, and defend why we need to control the growth rate and price levels in our economy.

• Explain the different types of inflation – demand pull and cost push

• Explain our current Monetary Policy and why we need it

• Describe Fiscal Policy and how government spending affects businesses and consumers

• Illustrate the concepts of Federal Reserve System and describe how the Fed controls the supply of money and credit

• Define Imports and Exports, and how the balance of trade affects business costs, consumer spending, production, and job markets

INSTRUCTIONAL METHODS For the rest of your life, you will be engaged in conversations about what is going on in the world. You will also make many decisions about accepting jobs, buying products, who to vote for, charging goods or services or paying cash for them, investing in stocks, bonds or mutual funds, etc. Understanding how our economy works will play a role in how you navigate through life, and will help you make much better decisions. STUDENT RESPONSIBILITIES Please be aware that there will be A GREAT DEAL OF READING in this course. You must be responsible enough to budget your time to complete the reading on schedule. Oftentimes the theories are difficult to pick up at first so you may need to read the material twice or more. YOU MUST PARTICIPATE IN ALL CLASSES – I cannot be responsible for helping you catch up if you miss class time. It is not fair to those students who are participating, and I cannot stop their learning to help if you are not giving me your best effort. Successful people are those that have a good attendance record and give their best effort all the time. That is what I will expect from you. I EXPECT all of your assignments to be passed in on time, and complete. Spelling and grammar are important. I want you to have pride in your work.

ASSIGNMENTS

• Assignments passed in on time will receive full credit

• Assignments will not be accepted late

EXAMS There are no make up exams, not taking an exam or quiz will result in a grade of “0”. In the event of extremely special circumstances, at my discretion, I may choose to allow you to take a make up exam. Please be aware, though, that make‐up exams will be CONSIDERABLY more difficult. I strongly urge you to make sure you take the exams and quizzes on the date scheduled and on‐time. GRADING Students will earn a letter grade based on their performance as follows: Projects and Papers 20% Discussion &Participation 40% Exams & Quizzes 40% STUDENT RESPONSIBILITIES Please be aware that there will be A GREAT DEAL OF READING in this course. You must be responsible enough to budget your time to complete the reading on schedule. Oftentimes the theories are difficult to pick up at first so you may need to read the material twice or more. YOU MUST LOG ON EACH WEEK ON MONDAY and SUBMIT YOUR WORK BY THE FOLLOWING SUNDAY – I cannot be responsible for helping you catch up if you miss class time. It is not fair to those students who are attending class, and I cannot stop their learning to help if you are not giving me your best effort. Successful people are those that have a good attendance record and give their best effort all the time. That is what I will expect from you. I EXPECT all of your assignments to be passed in on time, and complete. Spelling and grammar are important. I want you to have pride in your work. ASSIGNMENTS

• Assignments passed in on time will receive full credit

• No credit will be assigned for assignments turned in late

EXAMS There will be quizzes on the reading. GRADING Students will earn a letter grade based on their performance as follows: Assignments & Homework 250 Points Quizzes / Exams 250 Points Discussion Boards 200 Points Attendance 100 Points Final Exam 200 Points TOTAL 1000 Points Letter Grades will be assigned based on the points you earn for each listed above: 950 ‐ 1000 A 900 ‐ 1000 B 850‐900 C 800‐ 850 D Below 800 F ATTENDANCE It is the responsibility of each student to keep current with the lectures and assignments, and not slow others from progressing through the semester.

WEEK NUMBER READING Start Finish

Week 1 30‐May 5‐Jun

Introductions, OverviewChapter 1 The Art and Science of Economic Analysis

Week 2 6‐Jun 12‐JunChapter 2: Economic Tools and Economic Systems Chapter 3: Economic Decision Makers

Week 3 13‐Jun 19‐Jun

Chapter 4 Market Demand and SupplyChapter 5 Introduction to Macroeconomics

Week 4 20‐Jun 26‐JunChapter 6 Productivity and Growth

Chapter 7: Segmenting and Targeting MarketsWeek 5 27‐Jun 3‐Jul

Chapter 7 Tracking the US Economy

Week 6 4‐Jul 10‐JulChapter 8 Unemployment and Inflation

Week 7 11‐Jul 17‐Jul

Chapter 12 Fiscal PolicyChapter 13 Federal Policy and Public Policy

Week 8 18‐Jul 24‐JulChapter 14 Money and the Financial System

Chapter 15 Banking and the Money SupplyWeek 9

Chapter 16 Monetary Policy 25‐Jul 31‐Jul

ECO 140 – Macroeconomics (01, 02, 03) Middlesex Community CollegesCourse Syllabus (Spring 2012) R. KaulfussInstructor: Professor Robert Kaulfuss Email: [email protected] / Phone: 781‐280‐3852 / Website: BeyondEconomics.org Office: HH‐117 / Open Hours: MWF: 10:00‐11:00 / TR: 12:00‐1:00 / By appointment after 1:30 Course Schedule & Outline See Aplia for due dates of assignments, quizzes, and tests. See course objectives on next page. Week (Monday) Special Dates Topics/Weekly Quizzes) Essays 1 1/23 Classes (Mon) Intro to Economics 2 1/30 Employment and

Unemployment

3 2/6 GDP, Economic Growth, and Inflation

Employment, Technology, and Innovation

4 2/13 Money, Banking, and the Fed 5 2/20 Presidents’ Day

(Mon) The Financial Crisis

6 2/27 The Financial Crisis 7 3/5 Government Budgets, Deficits

and DebtCauses/Impacts of the Financial Crisis

8 3/12 Spring Break Week 9 3/19 Taxation and Public Finance 10 3/26 Professional Day

(Thur) Taxation and Public Finance (continued)

Balancing the Budget/Fixing Health Care

11 4/2 Supply & Demand, Market Equilibrium

12 4/9 Supply & Demand, Market Equilibrium

13 4/16 Patriots Day (Mon) AD/AS, Fiscal and Monetary Policy

Logistics and Globalization

14 4/23 International Trade & Globalization

15 4/30 Energy, Environment, and Infrastructure

16 5/7 Last Day of Classes (Fri)

Technology, Innovation, and the Future

Energy, Environment, & Infrastructure

17 5/14 Finals Week (Mon‐Thur)

Evaluation & Grading

Standard Assessment Percent

QUIZZES (Best 10 of 11) 35‐40%

ESSAYS (5) 30‐35%

ATTENDANCE & CLASS PARTICIPATION 20%

FINAL SUMMARY PAPER (No Final Exam) 10‐15%

Extra Credit

Class participation above average, absences fewer than average as noted below

Honors Option Contract (by arrangement with instructor by week 3)

Meet with the instructor every two weeks to develop an Honors research report

Above average attendance and class participation Required Course Materials Aplia.com (Course Key: PDC6-DSPV-K9GU) Aplia is an online course management system (electronic textbook plus interactive course learning system) It may be paid for online at Aplia.com ($90) OR by purchasing a payment code at the book store (about $102). The electronic text (no printed text is used) is based on Exploring Macroeconomics, 5 edition by Robert Sexton (2010). Quizzes and essays must be done through Aplia. How to Get Started

1. Go to Aplia.com and create an account. 2. Use the Course Key: PDC6‐DSPV‐K9GU. 3. You may use Aplia for the first three weeks before paying for it. 4. It may be paid for online at Aplia.com ($90) OR by purchasing a payment code at the book store

(about $102).

Attendance & Class Participation This portion of the grade will start at 80% for average attendance and average class participation. It is likely that the average student is likely to miss 4 MWF classes (or 3 TR classes) for the unexpected or unplanned: sickness, accidents, family/work emergencies, etc. For each absence more or less than 4 for MWF (3 for TR), this portion of the grade (not the whole grade) will go down or up by 5% (7% for TR). Students are expected to attend every class period in order to maximize the value they receive from taking the course and should email or voicemail the instructor whenever a class is missed. Students who have not been seen or heard from for two consecutive weeks may be administratively withdrawn from the course. Attendance will be taken each class, either at the beginning or end of the period. Students arriving late must verify their attendance if it was taken before they arrived. Students arriving consistently late must make arrangements with the instructor or risk an attendance penalty. Excessive sleeping and/or using cell phones may count as an absence. Above average class participation could be demonstrated by one or more of the following: consistently being prepared for responses when called upon, initiating critical questions during class, meeting with the instructor during office hours.

Final Summary Paper Instead of a final exam, a final summary paper will be due by the final exam period. The final summary report will consist of an organized portfolio of the course essays along with an additional essay tying together the themes of the course and reflecting on what was learned.

• Instructional Methodology

• Classroom Teaching & Learning Activities

• Lectures and discussions

• Videos and discussions

• Outside Classroom Student Learning & Activities

• Online interactive exercises and quizzes using the Aplia online learning and assessment system

• Essays on current economic issues

• Readings from the electronic textbook

• Use of the instructor’s website, BeyondEconomics.org

• Keeping up with current economic news and events in the media

• Internet and library research

Additional Policies Responsibilities: Students are expected to be aware of and adhere to the college's Honor Code (copies available on campus). Students are expected to conduct themselves in a respectful manner such that their words, actions, or behavior do not interfere with the learning of other students or the delivery of instruction by the professor. The student is expected to take the initiative and responsibility for keeping up with class work, especially when unexpected or uncontrollable external factors arise. Disappearance: If a student has been absent without notice for two consecutive weeks, it may be assumed that the student is dropping or will drop the course and an F grade or administrative withdrawal may result unless the student withdraws. Course Completion: There will be no Incomplete grades given under any circumstances. Helping Others: Students are encouraged to assist one another on class work in ways that help the other student understand how to do it for themselves (as opposed to just giving or showing them the solution). Unacceptable Actions Copying: It is unacceptable to use electronic or printed copies of another student's work (except in the case designated partner or team work); Plagiarism: It is unacceptable to copy and pass off as one's own the ideas or words of another without properly crediting the source. Instances of inappropriate or unacceptable academic behavior will treated on a case by case basis with the consequences ranging from no credit on the assignment for those involved to automatic failure of or removal from the course. In addition, college authorities may be notified. Catalog Description An introduction to the theory of income determination, business cycles, national income analysis and economic growth. The role of labor and capital markets in economic activity is examined to explore the problems of unemployment and inflation. The functioning and impact of the monetary system is introduced. Government stabilization activity utilizing monetary and fiscal policy is explored. The mechanics of international goods transactions and the balance of trade, as they influence the domestic

economy are examined. Note: Satisfies the Social Science Elective and meets the Values, Ethics, and Social Policy Intensive Value.

Course Objectives (see full online syllabus)

Economic Foundations 1. History and Development

• Appreciate and be aware of the role of economics in the history and development of human civilization

2. Basic Concepts • Distinguish between Macroeconomics and Microeconomics

• Understand the problem of scarcity and the concept of economic choice

• Identify the factors of production: land, labor, and capital and understand the three basic economic questions of "What", "How", and "For Whom"

• Distinguish between positive and normative economic analysis

• Understand the importance and limitations of economic models and theories

• Understand the concepts of opportunity costs and marginal analysis

• Appreciate different cultural frames of reference with respect to business, money and economics (for example, America: "time is money"; Japan: "space is money")

3. Economic Systems • Define, describe, and compare the three basic types of economic systems: traditional, market,

and command

• Describe the differences between capitalism, socialism and communism

• Understand that all real‐world economies have elements of both socialism and capitalism present in their systems and that some economies, such as China, are in transition

• Understand how the economic philosophies of the U.S. political parties relate to economic theories and system

4. Supply and Demand • Describe the laws of demand and supply and express them graphically

• Distinguish between a change in quantity demanded (supplied) from a change in demand (supply).

• Identify and describe the nonprice determinants that could cause an increase and a decrease in demand (supply).

• Understand and graphically express market equilibrium.

• Macroeconomic Principles

5. GDP & the Circular Flow Model of the Economy • Identify the three major goals of Macroeconomics: full employment, price stability, and

economic growth

• Define GDP, GNP and describe the difference between the two

• Express the circular flow nature of our economy

• Describe the components of GDP and their relative importance as a percentage of GDP

• Identify and describe some GDP shortcomings

• Define the other accounts: NNP, NI, PI, and DI

• Explain the difference between nominal GDP and real GDP

6. Business Cycles, Economic Growth, & Unemployment • Define what is meant by a business cycle and express it graphically

• Describe the four phases of the business cycle (peak, recession, trough and the expansion), including the problems associated with the recessionary and expansionary phases

• Identify key leading, coincident, and lagging economic indicators

• Define the full employment unemployment rates

• Describe the different types of unemployment (frictional/transitional, structural and cyclical)

7. Inflation • Identify and define the measures of inflation (consumer price index)

• Describe the consequences of inflation on real income, wealth and real interest rates

• Identify and define the different types of inflation (demand‐pull, cost‐push)

• Describe what is meant by hyperinflation and the wage‐price inflation spiral

8. Aggregate Demand & Supply, Fiscal Policy, Government Spending & Taxation • Define fiscal policy and how appropriate use of expansionary and contractionary fiscal policy will

help moderate fluctuations in the business cycle

• Contrast changes in government spending with changes in tax rates with respect to the multiplier effect on the economy

• Understand the role of budget deficits, surpluses, and automatic stabilizers

• Explain the Lafer curve and the theory of supply‐side fiscal policy (as contrasted with Keynesian theory)

• Identify and describe the major sources of government receipts and outlays at the federal, state and local levels as well as their trends

9. Money, Banking, & Monetary Policy • Explain what money is, including the three functions of money (medium of exchange, unit of

account, store of value) and the desirable properties of money (portability, divisibility)

• Understand what stands behind the U.S. money system

• Identify three money‐supply definitions

• Describe the Federal Reserve System and its role in controlling the money supply and setting monetary policy

• Describe the money creation process, including the multiplier effect

• Understand the relationship between monetary policy and interest rates and their effect on the economy

Economic Issues 10. The Current Crisis

• Explain the origins of the credit and housing bubble

• Explain the role of the banking and financial system

• Describe the impact on the general economy

• Outline possible responses and strategies for dealing with the crisis by business, government, and society

11. Federal Budget & National Debt • Understand the difference and relationship between federal budget deficits (surpluses) and the

national debt, including an awareness of some historical trends

• Explain how deficits are financed and describe the short‐term and long‐term consequences of budget deficits and the national debt

• Compare approaches to reducing the deficits and debt and how these are complicated by politics

12. The Role of Government in the Economy and Society • Explain the major issues with respect to taxation (efficiency versus the equity, benefits‐received

versus ability‐to‐pay)

• Distinguish between a progressive, proportional, and regressive tax based on the marginal tax rate on additional income and describe their impact on after‐tax income distribution

• Describe some of the problems associated with government decision‐making (public choice theory)

13. The Politics of Economics • Be able to compare and contrast the positions and philosophies of the two major political

parties

• Be aware of how politics influences and complicates fiscal policy decisions

• International Economics and Globalization

• Explain why nations trade and define comparative and absolute advantage

• Discuss the issue of free trade versus protectionism

• Define the concepts of balance of payments and exchange rates

• Discuss the pros and cons of outsourcing

• Understand the relationship among the American, European, and Asian economics

14. Be able to discuss and evaluate several sides of the issues surrounding these topics: • Energy and Climate Change

• The Rise of China

• Demographics and the aging population

• Immigration

• Health Care

MIDDLESEX COMMUNITY COLLEGE

Economics Department

COURSE: Principles of Macroeconomics: ECO 140 (Section 53) CRN 12708 Term: Fall 2012 September 6 – December 13 Class day & time: Tuesday/Thursday 7:30 am – 8:45 am Location: Lowell City Building – Rm 104

General Education electives: Social Studies Intensive Value: Values/Ethics/Social Policy Prerequisite: Placement above or successful completion of ENG 060(EN 2103), eligible for ENG 101 (EN1103), a minimum of one year of high school algebra or completion of MAT 070 (MA 1103) or placement into MAT 080 (MA 1104). COURSE DESCRIPTION: An introduction to the theory of income determination, business cycles, national income analysis and economic growth. The role of labor and capital markets in economic activity is examined to explore the problems of unemployment and inflation. The functioning and impact of the monetary system is introduced. Government stabilization activity utilizing monetary and fiscal policy is explored. The mechanics of international goods transactions and the balance of trade, as they influence the domestic economy are examined. INSTRUCTOR: John M Driscoll

Email: [email protected] Telephone number 978-973-9336

TEXT: Exploring Macroeconomics, by Robert L. Sexton, Thomson South-

Western, 5th Ed; ISBN 13:978-1-111962294 (Aplia1-Semester Printed Access card for Sexton’s Exploring Microeconomics, 5th edition)

INSTRUCTIONAL OBJECTIVES

MCC’s Institutional Student Learning Outcomes (ISLOs) Written and Oral Communication – Quantitative Literacy – Social Responsibility

Critical Thinking – Multicultural and Global Literacy – Personal and Professional Development

Core Student Success Skills “CSSS” Critical Thinking – Collaboration – Communication – Organization – Self Assessment

Students will have the opportunity: * To develop a strong level of literacy in economics (terminology and concepts). * To acquire a familiarity with economic methods used in analyzing economic and social issues. * To understand economic decision-making and its impact on social policy. * To establish a foundation useful in further study in economics, as well as possible application in individualized areas of interest.

Course Methodology

Each week, you will be expected to: 1. Review the week's learning objectives. 2. Complete all assigned readings. 3. Complete all lecture materials for the week. 4. Participate in the Discussion Board. 5. Complete and submit all assignments and tests by the due dates.

GRADING/ EVALUATION

Aplia 20%Assignments 20%Mid-Term Exam 20%Final Exam 40%

Grading items will have defined due dates. Late submissions will be penalized as specified.

Series1, Aplia, 20%,

20%Series1, , 0, 0%

Series1, Assignments, 20%, 20%Series1,

Mid‐term, 20%, 20%

Series1, Final exam, 40%, 40%

Grading

Writing Statement: While the principal goal of this course is the acquisition of knowledge in the subject area, students should be aware that clear and effective writing is an integral part of the learning process. Academic Dishonesty and Plagiarism Statement: Academic dishonesty is one of the most serious offences that a student can commit while in college and appropriate punitive sanctions will be imposed on violators. Cheating and participation in academically dishonest activities will not be tolerated. ATTENDANCE POLICY: Students are expected to be in class and on time. Prior notification of absences is required. In the unlikely event a student is late they are to sit in the back of the class. CLASSROOM ATMOSPHERE: It is expected that all will display the utmost dignity and respect for all in attendance. Although the class may have a relaxed atmosphere distractions such as ringing cell phones, texting messages, personal conversations and frequent tardiness are disruptive and unacceptable. COURSE CALENDAR

SESSION COURSE TOPICS

Week 1 Introduction: The Role and Method of Economics; Scarcity, Trade-Offs, and Economic Growth

Week 2 Chapters 4: Supply and Demand Week 3 Chapter 5: Bringing Supply and Demand Together – Market equilibrium price & quantity: Week 4 Chapter 6: Elasticities- Price elasticity; Cross-price elasticity; and Income elasticity Week 5 Chapter 7: Market Efficiency and Welfare Week 6 Chapter 8: Market Failure – Externalities; Public goods; and Asymmetric information Week 7 Chapter 9: Public Sector and Public Choice Week 8 Chapter 10: Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations Week 9 Chapter 11: Measuring Economic Performance Week 10 Chapter 14: Aggregate Demand and Aggregate Supply Week 11 Chapter 15: The Aggregate Expenditure Model Week 12 Chapter 16: Fiscal Policy Week 13 Chapter 17: Monetary Institutions Week 14 Chapter 18: The Federal Reserve System and Monetary Policy Week 15 Chapter 19: Issues in Macroeconomic Theory and Policy

Academic Support and Tutoring Through the services provided by the Academic Support Program, students can access individual and group tutoring for free, both online and in person. Tutors lead study sessions, assist with projects and assignments, and provide guidance in the use of computers and learning tools.

Lowell Computer tutoring– City Campus – LC403 and LC406B (978-656-3447 or 3365) Bedford Computer tutoring – Bedford Campus – Bedford Library and Writing Center (Located in the Bedford library 780-280-3727)

Library Services The MCC libraries provide services for students, faculty and staff on both the Bedford and the Lowell Campuses. Librarians are available during all the hours that the library is open. We provide print books and periodicals as well as access to e-books and dozens of article databases in all subject areas. These are available from on and off campus. We are members of statewide and nationwide networks through which we can borrow books, films and journal articles. A reserve collection of textbooks provided by or requested by faculty for students is available on both campuses. Our services are available through online chat, text and email as well as in person. Librarians provide instruction classes at the request of faculty either in our classroom or in theirs. There are 30+ computers on each campus for student use. Hours are 8am-9pm Monday-Thursday, 8am-430pm on Friday and 12-5pm on Saturday during the Fall and Spring semesters.

Lowell campus 978-656-3004 Bedford Campus 781-280-3708

Disability Support Services: Students with documented disabilities who believe that they may need accommodations(s) in this class are encouraged to contact Disability Support Services in order to ensure that such accommodations are accomplished in a timely manner. Lowell campus – city campus building, 3rd floor (978) 656-3258 (on-campus x3258)

NOTE: The instructor may make changes in the syllabus or weekly schedule at any time during the term through announcements. A revised syllabus may be issued at the discretion of the instructor.

Core Student Success Skills “CSSS” Critical Thinking – Collaboration – Communication – Organization – Self Assessment

________________________________________________________________________

Prof. Camelia Bouzerdan [email protected] MWF 12:30 – 1:20 01.23.2012 – 5.16.2012 LC 210 3 credits General Course Description This course is an introduction to the theory of income determination, business cycles, national income analysis and economic growth. The role of labor and capital markets in economic activity is examined to explore the problems of unemployment and inflation. The functioning and impact of the monetary system is introduced. Government stabilization activity utilizing monetary and fiscal policy is explored. The mechanics of international goods transactions and the balance of trade, as they influence the domestic economy are examined. Prerequisite: Placement above or successful completion of ENG 060, eligible for ENG 101, a minimum of one year of high school algebra or completion of MAT 070 or completion of modules 1‐8 in Preparation for College Math or placement into MAT 080. Recommendation: Concurrent enrollment in ENG 075 or ENG 085 if CPT reading placement test is between 68 and 75. General Education Elective: Social Science Intensive Value: Values / Ethics / Social Policy Course Materials: Required online Course Management System (aplia.com)

Aplia online learning system (Aplia Access Cards at MCC Bookstore) Course key: 4RWE‐C6YQ‐RUVW

What is Aplia? Aplia is an online course management system that you will use in this class for

homework and as a textbook

How to Get Started

1. Go to www.aplia.com and create an account. 2. It is recommended that you give an email address that you use frequently because there

you will receive information about your homework. 3. Use the Course Key: 4RWE‐C6YQ‐RUVW 4. You can use the system for free until the end of the day on 02.12.12 5. Pay for Aplia with the payment code that is found on the access card (by the end of the

grace period – 02.12.12)

Instructional Objectives: • Students will explain and illustrate the main ideas that define the economic way of thinking • Students will identify the interaction between supply and demand • Students will list the causes which determine the market failure • Students will explain how the government obtains revenues through taxation • Students will describe how economic principles apply to politics • Students will define the unemployment rate and other labor market indicators. • Students will describe the source of unemployment and label the types of unemployment • Students will describe how the government measures the changes in the price level and

computes the rate of inflation. • Students will describe what happens in a business cycle. • Students will define the GDP and other indicators of national economic performance • Students will explain how the government can employ fiscal policy to stabilize the economy. • Students will label the different forms of money • Students will describe the functions of money • Students will describe how banks create money. • Students will value the importance of the Federal Reserve System and monetary policy. • Students will analyze how markets work with international trade • Students will describe a country’s balance of payments accounts • Students will explain how the exchange rate is determined • Students will formulate useful questions about the topics being studied • Students will be able to apply fundamental theories in macroeconomics to real‐world

situations Teaching procedures:

Classroom Teaching and Learning Activities

Lecture Discussion PowerPoint presentation Debate Group activities

Outside Classroom Student Learning Activities Reading from the textbook Using the Aplia online learning and assessment system Internet and library research Following up the economic news and events in the media

Course Outline

Date Principle Topics Tests Week 1

January 23 Introduction January 25 The Economic Way of Thinking January 27

Week 2

January 30 Supply and Demand February 1 February 3 Bringing Supply and Demand Together

Week 3

February 6 February 8 Market Failure February 10

Week 4

February 13 Public Sector and Public Choice February 15 February 17 Review for Test 1

Week 5

February 20 Presidents’ Day – No class February 22 Test 1 February 24 Unemployment

Week 6

February 27 February 29 March 2

Week 7

March 5 Inflation March 7 March 9 Economic Fluctuations

S P R I N G B R E A KWeek 8

March 19 Measuring Economic Performance March 21 March 23 Review for Test 2

Week March 26 Test 2

9 March 28 Fiscal Policy March 30

Week 10

April 2 April 4 Monetary Institutions April 6 ! Last Day to Withdraw From Class

Week 11

April 9 The Federal Reserve System and Monetary Policy April 11 April 13

Week 12

April 16 Patriots’ Day – No class April 18 International Trade April 20

Week 13

April 23 April 25 International Finance April 27

Week 14

April 30 Review for Test 3 May 2 Test 3 May 4 Review for the Final Exam

Week 15

May 7 May 9 May 11

May 16 1PM‐3PM

Final Exam

Evaluating and Grading Standard Assessment: HOMEWORK:

• about one per week (Aplia online) • every homework is due in 2 weeks after being assigned • the first week, the homework is on practice mode, the second week, the

homework is on graded mode • the system does not allow you to submit the homework after the due

date

TESTS: • about three during the semester:

Test 1 – February 22 Test 2 – March 26 Test 3 – May 2

• the students are expected to take the test on the day it is scheduled

• missing a test without giving a prior note to the teacher results into a zero grade for that test

FINAL EXAM:

• cumulative for the semester (May 16, 1pm‐3pm) Final Grade The final grade will reflect: 35% homework grade 30% average tests score 35% final exam Extra Credit Perfect attendance (3 points) Remarkable class participation

Attendance Policy Students are expected to be on time and attend every class period in order to maximize the value they receive from the course, and be able to achieve an outstanding performance on assignments and tests.

Attendance will be taken each class. Students arriving late must check in with the instructor at the end of class, otherwise, they will be marked as absent.

Being late 15 minutes or more for three times, means one absence. The student will be allowed 4 excused absences for emergencies, sickness, family issues, work, etc

For the absences due to religious belief, students will give a previous note to teacher. Unexcused absences will be penalized with grade reduction regardless of reason ‐ for every absence, the final grade will be reduced by 1%; Example: if your final grade was supposed to be 94 (A) and you have 3 unexcused absences, your final grade will be reduced by 2.82, resulting in 91.18 (A‐).

It is the student’s responsibility to notify the instructor as soon as possible of any absence and arrange to gather missed notes or course materials and assignments.

Students who have not been seen or heard from, for two consecutive weeks, may be administratively withdrawn from the course.

Unacceptable Actions (Student Handbook‐p6) Academic Misconduct • Cheating • Receiving or giving unauthorized aid • Plagiarizing • Misrepresenting oneself or one's work • Lying, fabrication, and falsification

• Aiding or encouraging the academic misconduct of others Personal Misconduct • Disrupting class or campus activities or environments • Harassing or otherwise interfering with the safety, rights, and freedoms of others • Stealing from or accessory to theft from others or the college • Misusing computer and network facilities • Damaging, or unauthorized or inappropriately accessing records, equipment, and facilities • Using or being under the influence of alcohol or illegal substances on campus • Unauthorized prom

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