Economics 1120-1, Wissink-INTRODUCTORY MACROECONOMIC THEORY
Cornell University - Spring 2009

Readings & Course Outline

PART I: THE ECONOMIC SETTING - INTRODUCTION

A. Basic Questions and Definitions
Readings: Text, Chapter 1 (be sure to read appendix); Guide, Chapter 1

B. The Economic Problem: Scarcity and Choice
Readings: Text, Chapter 2 and Chapter 19 (pages 355-362 for now)

C. The Basics of Markets: Demand and Supply
Readings: Text, Chapters 3 and 4

PART II: DETERMINATION OF NATIONAL OUTPUT AND ITS FLUCTUATIONS

A. Macroeconomics Overview: A First Look
Readings: Text, Chapter 5; Guide, Chapter 1 (review), Chapter 2

B. The Concepts of Domestic & National Product and National Income - the horrors of national income accounting
Readings: Text, Chapter 6; Guide, Chapter 3, appendix 3A

C. Problems of Inflation and Unemployment: Definitions and Measurements
Readings: Text, Chapter 7

PART III: THE BASICS OF POPULAR MACRO MODELS

A. The Basic Income Determination Model and Fiscal Policy: How it Works According to Keynesian Theory
Readings: Text, Chapters 8 and 9; Guide, Chapters 4, appendix 4A, 5 and 6

B. Adding the Money Market and Monetary Policy: How it Works According to Keynesian Theory
Readings: Text, Chapter 10; Guide, Chapters 11, 12
Readings: Text, Chapter 11; Guide, Chapters 13, 14
Readings: Text, Chapters 12 and 17 pages 345-end; Guide, Chapters 15 and 16, pages 107-111. Cautionary note: your textbook (like every major introductory textbook) is particularly defective in explaining the inverse relationship between desired investment and the level of interest rates. These defects are outlined and corrected in the assigned readings. If you are planning to continue in economics, you should also read the Guide appendix 15A.

C. The Aggregate Demand/Aggregate Supply Analytical Framework
Readings: Text, Chapters 12&13, review Chapter 5; Guide, Chapters 7, 8, 9, 10, 16, pages 111-113 (Complications for monetary and fiscal arising from an open economy are reviewed in the Guide, Chapter 25.)

D. Fighting Inflation and Unemployment with Counter-cyclical Fiscal and Monetary Policy
Readings: Text, Chapter 13
Readings: Text, Chapters 14, 15 and 16; Guide, Chapters 17, 18 and 19

E. Economic Growth: the Neglected Priority (until now)
Readings: Text, Chapters 17 and 18; Guide, Chapter 20

PART IV: INTERNATIONAL TRADE: THE MISSING MACROECONOMIC DIMENSION

A. Why Bother to Trade: Comparative Advantage
Readings: Text, Chapter 19; Guide, Chapter 22

B. The Balance of Payments Accounts and Exchange Rates
Readings: Text, Chapter 20; Guide, Chapter 23

C. Monetary and Fiscal Policy in an International Setting
Readings: Text, Chapters 9 and 20; Guide, Chapters 23, 24

D. Deficits Old (federal government) and New (foreign trade)
Readings: Chapters 20, 9 and 15; Guide, Chapter 21

OVERVIEW/REVIEW: Readings: Guide, Chapter 26