MCCCD Official Course Competencies:

ECN211  2007 Spring – 2011 Summer II

Macroeconomic Principles

1.

Define the major concepts in economics, and describe and analyze major economic systems. (I, II)

2.

Describe the determinants of supply and demand, and the effect on equilibrium price. (III)

3.

Identify measures of the national economy, and describe how they are compiled and analyzed. (IV)

4.

Describe the Keynesian income/expenditure model. (V)

5.

Describe the aggregate demand and supply curves and causes of short- and long-run equilibrium. (VI)

6.

Identify major determinants of fiscal policy, and describe their impact on government decisions. (VII)

7.

Describe the relationship between money and prices. (VIII)

8.

Describe commercial banking procedures and the functions of the Federal Reserve System. (IX)

9.

Describe U.S. monetary policy and problems which occur. (X)

10.

Describe the causes and effects on the economy of inflation and unemployment (XI)

11.

Describe stabilization policy and the implications of the Phillips curves. (XI, XII)

12.

Describe the evolution of the international monetary system. (XIII)

13.

Describe the structure and trends of U.S. balance of payments. (XIII)

MCCCD Official Course Outline:

ECN211  2007 Spring – 2011 Summer II

Macroeconomic Principles

I. Major Concepts in Economics

A. Scarcity and choice

B. Macro vs. microeconomics

C. Positive vs. normative economics

D. Factors of production

II. Analysis of Economic Systems

A. Production possibility frontier

B. The economic problem

C. Specialization and exchange

D. Property rights

III. Introduction to Supply and Demand

A. Supply

1. The supply curve

2. Factors that cause supply curves to shift

B. Demand

1. The law of demand

2. Factors that cause demand curves to shift

C. Equilibrium of demand and supply

1. What the market accomplishes

2. Effects of price ceilings

D. Changes in equilibrium price

IV. Measuring the National Economy

A. Dynamic measures of the economy

1. Unemployment

2. Inflation

3. Business cycles

B. The circular flow of economic activity

C. National income accounting

1. Gross national product/gross domestic product

2. Real gross national product

3. National income

4. Leakages equal injections

5. Balance of trade

V. The Keynesian Income/Expenditure Model

A. The Classical model

B. The income/expenditure approach

1. Consumption, income, and savings

2. The marginal propensities

3. Other factors that affect consumption

C. Equilibrium income and expenditures

D. Multipliers

E. The theory of investment

VI. Aggregate Demand and Aggregate Supply

A. Aggregate demand curve

B. Aggregate supply

C. Short-run equilibrium

1. Supply shocks

2. Shifts in aggregate demand

3. Inflationary and deflationary gaps

D. Long-run equilibrium

VII. Fiscal Policy

A. Automatic stabilizers

B. Taxation

C. Discretionary fiscal policy

D. Link between government and trade deficits

E. Effectiveness of fiscal policy

1. Multipliers and crowding out

2. Lags in fiscal policy

F. Line-item veto and balanced budget amendment

VIII. Money and Prices

A. The functions of money

B. The supply of money

C. The relationship between money and prices

1. Classical quantity theory of money

2. The velocity of circulation

3. The equation of exchange

4. Changes in money supply and prices

IX. Commercial Banking and the Federal Reserve

A. Commercial banking

B. How banks create money

1. Monetization of debt

2. The deposit multiplier

3. Money expansion in the real world-the money multiplier

C. International banking

D. The Federal Reserve

1. History and function

2. Present role

E. The FDIC (Federal Deposit Insurance Corporation) and FSLIC (Federal Savings and Loan Insurance Corporation)

X. Monetary Policy

A. Policy tools

B. Keynesian monetary policy

C. Money growth and interest rate targeting

D. Problems of monetary policy

1. Lags in monetary policy

2. Problems of controlling the money supply

3. Knowing the money multiplier

E. Independence of the Federal Reserve Bank

XI. Inflation and Unemployment

A. Inflation

1. Demand-side and supply-side inflation

2. Monetary growth and inflation

3. Inflation and interest rates

4. Inflation expectations

B. Changes in the natural rate of unemployment

C. The Phillips curve

1. The breakdown of the Phillips curve

2. The short-run and long-run Phillips curves

XII. Stabilization Policy

A. Implications of the Phillips curves

B. Activism versus nonactivism

C. New policy directions

XIII. International Trade

A. The evolution of the international monetary system

B. International trade agreements and the balance of payments