Department of Economics

ECON 102

Winter 2007, Alan Deardorff

Prerequisite Requirements Exams Grades Texts
Coursepacks Wall Street Journal Study Aids Communication Schedule


This course deals with the behavior of the major economy-wide, or aggregate, economic variables. These include the level and growth rate of GDP, the rate of unemployment, the price level and rate of inflation, the rate of interest, the exchange rate, the trade deficit and the government budget deficit. All of these are prominently featured in the news. The purpose of the course is to provide an analytical framework that will enable students to make sense of these economic aggregates. It is important to know not just what they mean and how they are measured, but also how they relate to each other and how they are determined in a market-oriented economy like that of the United States. This in turn will bring us to important issues of economic policy, and the extent to which such policies can and should be used to influence these variables, especially in the context of the interdependent world economy.

Prerequisite: Econ 101 - Principles of Microeconomics - or equivalent

Organization: Students are expected to attend three hours of lecture and a 1-1/2 hour section meeting each week. Lectures are TTh at 2:40 PM in the Askwith Auditorium, 140 Lorch. Section meetings, scheduled at various times and places on Fridays, will be led by graduate student instructors (GSIs) who are graduate students in the Department of Economics.

Permissions: When the course fills up during registration, there will NOT be a waitlist. Instead, as students drop the course, it will then be possible to register into the spaces that open up. Since sections are already set at their maximum size, it will not be possible to grant permission to add into a section that is already full. You should just keep trying to register until a space opens up and you get in.





How We Will Use the Wall Street Journal:

Study Aids:



Office Hours: The GSIs will hold regular office hours for students in their own sections, and they will also participate in a system of pooled office hours that will enable any student to consult with a GSI in room 104 Lorch Hall during any of a broad range of hours (to be announced). They will also schedule special office hours and review sessions during the days prior to each exam. You are welcome to attend office hours of GSIs other than your own.

My office and office hours this term are (tentatively) as follows:

3314 Weill: Mondays, 10-11 AMPhone: 764-6817
Thursdays, 10-11 AM

The times may change if I acquire conflicting commitments after the term starts, so check my home page to be sure before you visit. I will be glad to talk with you during those times without an appointment, or at other times with an appointment.

E-mail The GSIs and I will all be available by e-mail, and we will be glad to answer questions there. Our e-mail addresses are listed below:
Professor:Alan Deardorff
Head GSI:Brian Rowe
Omar Alshanqeety
Angus Chu
Jean-Benoit Rousseau
Xiaoqing Song
The Web Wherever possible, course materials will be posted at the following site on the World Wide Web:
(To find this, you can go through CTools, or just google "deardorff" and enter through my home page.) You should look there for all course materials, including homework assignments and answers. There will also be a place on the site reporting questions that students have asked me by e-mail and the answers that I have given them.

The publisher of the Mankiw text, Thomson-South-Western, also maintains a web site for your textbook where you can find additional resources and practice exercises and tests, among other things.




Assignments and Sections
Jan 4 Hand out syllabus None
(Sections do not meet Friday Jan 5)

Jan 9 Introduction and Review Mankiw 1-2
Skim Mankiw 3-4 (very brief review of micro)

Jan 11 Measuring Production Mankiw 5
Mustafa on Gross National Happiness, online
Ridenour on economic wellbeing in the United States, online
Wattenberg on information from the 2000 US census, online (Proquest, via U of M)
Section: Jan 12
  • In-class activity
  • HW 1 assigned: "Measuring National Income and Prices" (See online.)

  • Jan 16 Measuring Prices Mankiw 6

    Jan 18 Short Run Versus Long Run

    Mankiw 15, pp. 323-330
    Hymans on the U.S. economic outlook, online | backup
    Armentano on the next recession, online
    Section: Jan 19
  • HW 1 Due
  • HW 2 assigned: "Economic Growth"

  • Jan 23 Economic Growth Mankiw 7
    Romer on the sources of growth, online

    Jan 25 Getting Savings to Investors Mankiw 8, pp. 159-168
    Section: Jan 26
  • Quiz 1
  • HW 2 Due
  • HW 3 assigned: "Savings, Investment, and the Loanable Funds Market"

  • Jan 30 The Market for Loanable Funds Mankiw 8, pp. 168-176
    Orszag on tax cuts and savings, online
    Mitchell on effects of lower tax rates, online

    Feb 1 Finance Mankiw 9
    Section: Feb 2
  • HW 3 Due
  • HW 4 assigned: "Finance and Unemployment"

  • Feb 6 Unemployment Mankiw 10
    Bureau of Labor Statistics on the definition of unemployment, online
    Francis on effects of unemployment insurance, online

    Feb 8 ***Midterm Exam No. 1*** Covers through Mankiw 8
    Section: Feb 9
  • Go over exam

  • Feb 13 Money Mankiw 11, pp. 225-234

    Feb 15 Banks and the Money Supply Mankiw 11, pp. 234-241
    Section: Feb 16
  • HW 4 Due
  • HW 5 assigned: "The Monetary System and Inflation"

  • Feb 20 Inflation Mankiw 12

    Feb 22 International Transactions
    and Exchange

    Mankiw 13
    Section: Feb 23
  • HW 5 Due
  • HW 6 assigned: "Open-Economy Macroeconomics"

  • *** Winter Break ***

    Mar 6 An Open-Economy Model Mankiw 14, pp. 299-308, 311-317

    Mar 8 The Budget and Trade Deficits Mankiw 14, pp. 308-311
    Griswold on the trade deficit, online
    Scott on trade and jobs, online
    Section: Mar 9
  • Quiz 2
  • HW 6 due
  • Review for exam

  • Mar 13 Review: The Big Picture (No new reading)

    Mar 15 ***Midterm Exam No. 2*** Cumulative through Mankiw 14
    Section: Mar 16
  • Go over exam

  • Mar 20 Aggregate Supply Mankiw 15, pp. 323-330, 334-344 (some repeat from Jan 14)

    Mar 22 Short Run Aggregate Demand Mankiw 15, pp. 330-334
    Section: Mar 23
  • HW 7 assigned: "Aggregate Supply and Demand"

  • Mar 27 Causes of Economic
    Mankiw 15, pp. 344-355

    Mar 29 Monetary Policy Mankiw 16, pp. 361-370
    Section: Mar 30
  • HW 7 due
  • HW 8 assigned: "Economic Fluctuations and Macro Policies"

  • Apr 3 Fiscal Policy Mankiw 16, pp. 371-381
    Burman and Gale on fixing the AMT, online
    Aaron and Hacker on taxing alcohol, online

    Apr 5 The Phillips Curve Mankiw 17, pp. 385-400
    Section: Apr 6
  • Quiz 3
  • HW 8 due
  • HW 9 assigned: "AD/AS and The Phillips Curve"

  • Apr 10 Moving Along the Phillips
    Mankiw 17, pp. 400-409
    Postrel on Milton Friedman, online

    Apr 12 Stabilization Policy Mankiw 18, pp. 417-428
    Greenspan on uncertainty, online
    Hassett on inflation targeting, online
    Section: Apr 13
  • HW 9 due

  • Apr 17 Other Issues, Recap, etc. Mankiw 18, pp. 428-436
    Prescott on Macroeconomic Myths, online (Proquest, via UM)

    Thu. Apr 19, 4:00-6:00 PM, FINAL EXAM
    Cumulative, with emphasis after Mankiw 14

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