Overview: This course is an introduction to macroeconomics. This subdivision of economics deals with the economy as a whole: aggregate national income and output, government spending and taxation, money and banking, monetary policy and international trade. Macroeconomics also deals with the overall level of output, its rate of growth, and the level of prices in general. This class is designed to give a more in depth understanding of economics and help prepare you for the AP exam in the spring. Please remember that a 60% or better is required for graduation.
Supplies: You will need the following:
- Two-pocket folder
- Pen or pencil
- Spiral notebook
- 3 ring binder
- Loose leaf paper
- Calculator to do simple math
Absences: If you are absent, it is your responsibility to get the make-up work. If your absence is unexcused, it will result in zeros for any missed assignments or tests. Your make-up work needs to be turned in within two days of your return. Excessive absences will result in a failing grade.
Assignments: Many of your assignments will be done in class, however there will be homework and work required of you outside of class as well so be prepared. All homework is due at the beginning of class.
Textbook: The textbook for this course will be Campbell R. McConnell and Stanley L. Brue, Economics: Principles, Problems, and Policies, 15th edition. New York: McGraw Hill Book Company. There is a set of books to be used in class and the book is available online for your use at:
If you do not have home internet access, you may check out a book as needed.
Class Website: TBA-The site is not yet complete, but will be up and running by 8/18/2012.
Test/Make-Up Tests: Each test is worth 100 points. Any combination of multiple choice, true-false, fill in the blank, matching, and short answer will be used. If you are absent the day before the test, you are still required to take the test on the day it’s scheduled. If you missed the test due to an excused absence, you will take a Make-Up test within three days of your absence. It will be a different test than the one given on the assigned day. TESTS MUST BE MADE UP AFTER SCHOOL.
Grading: Grading will be as follows:
- Tests 40%
- Quizzes 25%
- Homework/worksheets 25%
- Participation 10%
Participation: Participation will be done on a weekly basis. You are expected to be able to contribute to class discussions about the subject we are covering. This participation must be in an appropriate and mature manner. If you are tardy to class, then it will count against your participation grade.
Passes: Passes will not be issued to go to lockers or any other unnecessary places. Make sure you come to class prepared. You will have four restroom passes per quarter so please choose them wisely and do not interrupt in the middle of class.
- Respect others. You don’t have to like them, but you must be respectful to everyone in class.
- Participation. No sleeping or working on anything else other than what is assigned or discussed in this class.
- Follow rules and guidelines as outlined in your student planners. That includes no cell phones, food, drink, candy, gum, hats, or electronic devices. Please wear appropriate clothing that is in line with the school dress code.
- Remain seated until you are dismissed.
Extra Credit: It is not my policy to give extra credit. I expect you to complete your assignments and attend class.
Cheating: Cheating will not be tolerated and will result in a zero on any assignment or test in question. Cheating consists of copying another person’s work regardless of whether or not it’s a daily assignment or test. The person who is doing the copying will receive a zero as well as the person who allowed the cheating to occur.
Contact me: If you or your parents have any questions, please feel free to contact me by email at email@example.com or by phone at 213-2265.
Tips for Success
Because this may be one of the most challenging courses you will encounter in high school, and perhaps in college, here are some concrete study suggestions that should facilitate your success in this course.
- Read the assigned pages or chapter quickly to get an overview. You may want to skip the "boxes" and footnotes in this read-through.
- Read the chapter summary and questions at the end of the chapter.
- Re-read the assigned pages/chapter more slowly. Be sure you understand each key idea before you proceed with your reading.
- Study graphs, tables, etc., in detail until you understand each conclusion being drawn in connection with that particular illustration.
- Take notes, highlight (if you own the book) and draw your own graphs, etc. when you read. Make note of any questions you have for the next class. You are responsible for all assigned material, whether we discuss it in class or not.
- Be prepared to spend an hour or more on difficult sections.
- Use text website for quizzes and tests over appropriate sections and go over questions that you missed.
- Avoid getting behind in your work for this class. Economics is cumulative, like math. Gaps in your understanding from the early days of the class can "haunt" you for the rest of the semester.
- Learn to think in "economese"- proper economic terminology, Economics has its own unique definitions for many everyday words.
- Organize study groups among yourselves – they work!!!
- Come in for extra help when you need it.
- Be here and be prepared for class EVERYDAY.
- Try to be aware of current economic issues – read appropriate articles in newspapers and magazines listen to the news on TV and/or radio. This will help you understand what we are doing in class.
- Understanding economics, not memorizing, is the KEY to your success in this class; this will take time and effort on your part, but it will pay off.
The Nature and Method of Economics
This chapter begins with a discussion of the meaning and importance of economics. In this first chapter, however, we will not plunge into problems and issues; instead we consider some important preliminaries. We first look at the economic perspective—how economists think about problems. Next, we state some of the benefits of studying economics. Then, we examine the specific methods economists use to examine economic behavior and the economy, distinguishing between macroeconomics and microeconomics. Finally, the problems, limitations, and pitfalls that hinder sound economic reasoning are examined.
. LECTURE NOTES
- Definition of Economics
A. The social science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction of human materials wants.
B. Human wants are unlimited, but the means to satisfy the wants are limited.
- The Economic Perspective
A. Scarcity and choice
1. Resources can only be used for one purpose at a time.
2. Scarcity requires that choices be made.
3. The cost of any good, service, or activity is the value of what must be given up to obtain it. (opportunity cost).
B. Rational Behavior
1. Rational self-interest entails making decisions to achieve maximum fulfillment of goals.
2. Different preferences and circumstances lead to different choices.
3. Rational self-interest is not the same as selfishness.
C. Marginalism: benefits and costs
1. Most decisions concern a change in current conditions; therefore the economic perspective is largely focused on marginal analysis.
2. Each option considered weighs the marginal benefit against the marginal cost.
3. Whether the decision is personal or one made by business or government, the principle is the same.
4. The marginal cost of an action should not exceed its marginal benefits.
5. There is “no free lunch” and there can be “too much of a good thing.”
- Why Study Economics?
A. Economics for citizenship.
1. Most political problems have an economic aspect, whether it is balancing the budget, fighting over the tax structure, welfare reform, international trade, or concern for the environment.
2. Both the voters and the elected officials can fulfill their role more effectively if they have an understanding of economic principles.
B. Professional and personal applications
1. The study of economics helps to develop an individual’s analytical skills and allows students to better predict the logical consequences of their actions.
2. Economic principles enable business managers to make more intelligent decisions.
3. Economics can help individuals make better buying decisions, better employment choices, and better financial investments.
4. Economics is however, mainly an academic, not a vocational subject. Its primary objective is to examine problems and decisions from a social rather than personal point of view. It is not a series of “how to make money” examples.
- Economic Methodology
A. Economists use the scientific method to establish theories, laws, and principles.
1. The scientific method consists of:
a. The observation of facts (real data).
b. The formulations of explanations of cause and effect relationships (hypotheses) based upon the facts.
c. The testing of the hypotheses.
d. The acceptance, reject, or modification of the hypotheses.
The determination of a theory, law, principle, or model.
2. Theoretical economics: The systematic arranging of facts, interpretation of the facts, making generalizations.
3. Principles are used to explain and/or predict the behavior of individuals and institutions.
4. Terminology—Principles, laws, theories, and models are all terms that refer to generalizations about economic behavior. They are used synonymously in the text, with custom or convenience governing the choice in each particular case.
5. Generalization—Economic principles are expressed as the tendencies of the typical or average consumer, worker, or business firm.
6. “Other things equal” or ceteris paribus assumption—In order to judge the effect one variable has upon another it is necessary to hold other contributing factors constant. Natural scientists can test with much greater precision than can economists. They have the advantage of controlled laboratory experiment. Economists must test their theories using the real world as their laboratory.
7. Abstractions—Economic principles, theories or models are abstractions, simplifications, which attempt to find the important connections and relationships of economic behavior. These models are useful precisely because they strip away the clutter and complexity of reality.
8. Graphical Expression—Many economic relationships are quantitative, and are demonstrated efficiently with graphs. The “key graphs” are the most important.
B. Policy economics applies economic facts and principles to help resolve specific problems and to achieve certain economic goals.
1. Steps in formulating economic policy:
a. State goals.
b. Recognize various options that can be used to achieve goals.
c. Evaluate the options on the basis of specific criteria important to decision-makers.
2. Economic goals widely accepted in our economy.
a. Economic growth
b. Full employment
c. Economic efficiency
d. Price level stability
e. Economic freedom
f. Equitable distribution of income
g. Economic security
h. Balance of trade
3. Goals may be complementary (full employment and economic security).
4. Some goals may conflict (efficiency and equity). (Key Question 6)
5. All goals cannot be achieved, so priorities must be set.
- Macroeconomics and Microeconomics
A. Macroeconomics examines the economy as a whole.
1. It includes measures of total output, total employment, total income, aggregate expenditures, and the general price level.
2. It is a general overview examining the forest, not the trees.
B. Microeconomics looks at specific economic units.
1. It is concerned with the individual industry, firm or household and the price of specific products and resources.
2. It is an examination of trees, and not the forest.
C. Positive and Normative Economics.
1. Positive economics describes the economy as it actually is, avoiding value judgments and attempting to establish scientific statements about economic behavior.
2. Normative economics involves value judgments about what the economy should be like and the desirability of the policy options available.
3. Most disagreements among economists involve normative, value-based questions.
- Pitfalls to Objective Thinking
A. Biases—Preconceptions that are not based on facts.
B. Loaded terminology.
1. Terms that contain the prejudice and value judgments of others.
2. It is very difficult for a person to describe economic behavior without letting their options about that behavior creep into their discussion. The distinction between positive and normative statements is not always clearly apparent.
3. Often, however, there is a deliberate attempt to sway opinion by using loaded terminology. (greedy owners, obscene profits, exploited workers, mindless bureaucrats, costly regulations, creeping socialism)
1. Economics is a second language.
2. It is often difficult for students to recognize terms as new vocabulary that needs to be studied as diligently as though they had never before encountered the words.
3. Students in a physics class encountering terms like erg, ohm, or foot-pound recognize the need to investigate. Students that are reading a text filled with words like rent, capital, or investment assume that they already have an adequate working definition.
D. Causation Fallacies
1. Post hoc fallacy: When two events occur in time sequence, the first event is not necessarily the cause of the second event.
2. Correlation versus causation: Events may be related without a causal relationship.
a. The positive relationship between education and income does not tell us which causes the increase in the other. (Which is the independent variable and which is the dependent variable?)
b. It may be that the increase income that occurs with increased education is due to some other third factor that is not under direct consideration.
- A Look Ahead
A. Chapter 2 builds the production possibilities model that visually demonstrates the basic economic principles of scarcity, choice, opportunity cost, and the law of increasing costs.
B. Chapter 3 builds the supply and demand model for individual markets.
C. Chapter 4 combines all the markets in the economy and observes the coordination of economic activity through market prices.
D. Chapters 5 and 6 examine the important sectors of the economy (households, businesses, government, and the international sector) discussing their role and interaction.