EC-230 Principles of Macroeconomics

Course Description:

This introductory course in macroeconomics analyses the aggregate economic activity in the national economy and its link with the rest of the world. Emphasis is placed on basic principles involved in the determination of the level of national output, the aggregate price level, money supply, exchange rate, employment and unemployment, inflation, fiscal and the monetary policies. It further provides a broad understanding of economic growth and its implications on the economy.

A. PROGRAM LEARNING OUTCOMES (PLOs):

The student will be able to:

1. Demonstrate basic knowledge of each of the functional areas of business- accounting, management, marketing, economics and finance by emphasizing their importance in an organization and describing their interrelationship in the organization’s attempt to achieve its objective.
2. Demonstrate basic knowledge and skill in the use of cost and managerial concepts and techniques as management tools for planning, controlling, evaluating performance and making decisions
3. Demonstrate basic knowledge and skill in business mathematics and elementary statistics by accurately performing common business computations, statistical data presentation and analysis
4. Demonstrate basic knowledge and skill in intercultural writing and speaking appropriate for business
5. Demonstrate a basic understanding of the legal environment and ethical challenges confronting business in general and in the FSM, from both local and global perspectives

B. STUDENT LEARNING OUTCOMES (SLOs): - GENERAL

The student will be able to:

1. Explain the interdependence among household, business and government sectors in the operation of the economy
2. Identify stages of the business cycle - peak, recession, depression and expansion
3. Comprehend the methodology used to compute Gross Domestic Product (GDP) in FSM
4. Interpret the national budget - sources and expenditure of revenue and reasons for deficit and surplus budgets
5. Analyze the role of economic stabilization policy, including fiscal and monetary policy, in influencing the direction of Gross Domestic Product (GDP), unemployment and inflation
6. Describe the role of money and the banking system in the economy

SLO	PLO 1	PLO 2	PLO 3	PLO 4	PLO 5
1	D			I
2	D
3	I
4	I			I
5	I			I
6	I

I = Introduced D = Demonstrated M = Mastered

C. STUDENT LEARNING OUTCOMES (SLOs) – SPECIFIC:

The student will be able to:

General SLO 1. Explain the interdependence among household, business and government sectors in the operation of the economy.

Student Learning Outcomes	Assessment Strategies
1.1 Draw and explain the circular flow of resources, good, services and money	Homework and/or class quizzes and/or exams.
1.2 Explain Aggregate Supply and Aggregate Demand	Homework and/or class quizzes and/or exams.
1.3 Describe what is Gross Domestic Product and differentiate between Nominal and Real GDP	Homework and/or class quizzes and/or exams.

General SLO 2. Identify stages of the business cycle – peak, recession, depression and expansion.

Student Learning Outcomes	Assessment Strategies
2.1 Describe the various phases of the business cycle.	Homework and/or class quizzes and/or exams.

General SLO 3. Comprehend the methodology used to compute GDP in FSM.

Student Learning Outcomes	Assessment Strategies
3.1 Identify the two approaches of measuring Gross Domestic Product and the one used by FSM	Group Project, Homework and/or class quizzes and/or exams.
3.2 Describe the relationships between Gross Domestic Product (GDP), Gross National Product (GNP), Net National Product (NNP) and National Income.	Group Project, Homework and/or class quizzes and/or exams.
3.3 Identify the limitations of GDP as a measure of economic well-being	Group Project, Homework and/or class quizzes and/or exams.

General SLO 4. Interpret the national budget - sources and expenditure of revenue and reasons for deficit and surplus budgets.

Student Learning Outcomes	Assessment Strategies
4.1 Explain the interaction between consumers and producers	Homework and/or class quizzes and/or exams.
4.2 Identify Macroeconomic equilibrium is achieved and what is the equilibrium level of national income	Homework and/or class quizzes and/or exams.
4.3 Identify the relationship between saving and investment	Homework and/or class quizzes and/or exams.

General SLO 5. Analyze the role of economic stabilization policy, including fiscal and monetary policy, in influencing the direction of GDP, unemployment and inflation.

Student Learning Outcomes	Assessment Strategies
5.1 Describe the different types of unemployment, calculate the rate of unemployment	Homework and/or class quizzes and/or exams.
5.2 Identify and calculate recessionary and inflationary gaps	Homework and/or class quizzes and/or exams.
5.3 Describe what inflation is and how it is measured.	Homework and/or class quizzes and/or exams.
5.4 Describe fiscal policy tools and demonstrate their applications	Homework and/or class quizzes and/or exams.

General SLO 6. Describe the role of money and the banking system in the economy

Student Learning Outcomes	Assessment Strategies
6.1 Describe the characteristics and features of money	Homework and/or class quizzes and/or exams.
6.2 Explain how banks create money	Homework and/or class quizzes and/or exams.
6.3 Explain the interaction of bank deposits and loans	Homework and/or class quizzes and/or exams.
6.4 Describe the role of the Reserve Bank or Central Bank and in the case for FSM, the Banking Board as the regulator for the banking industry	Homework and/or class quizzes and/or exams
6.5 Describe monetary policy tools and demonstrate their applications.	Homework and/or class quizzes and/or exams

D. COURSE CONTENT

1. Introduction
2. Production Possibilities and Opportunity Costs
3. Demand and Supply
4. Aggregate Demand and Aggregate Supply
5. Gross Domestics Product Accounting
6. Consumption and Investment
7. Equilibrium National Income
8. . Fiscal Policy-Coping with Inflation and Unemployment
9. Long-Run Economic Growth and Business Cycles
10. Money
11. Money Creation and the Banking System
12. . The Federal reserve system and Monetary Policy
13. Can Government stabilize the Economy
14. Government Spending
15. . Financing Government-Taxes and Debt
16. International Trade
17. Exchange Rates, Balance of Payments and International debt
18. The Economic Problems of Less- Developed Economies

E. METHODS OF INSTRUCTION

Lectures, guest speakers, research project, business plan, case analysis, homework, classroom exercises, and various individual and group assignments. Power-point, LCD projections and videos will be used as instructional aid and other teaching materials depending on availability.

F. REQURIED TEXT(S) AND COURSE MATERIALS

GOTTHEIL,F. M.E. (2008). Principles of Macroeconomics, 5th Edition (or most recent edition).

G REFERENCE MATERIALS

None

H. INSTRUCTIONAL COSTS

None

I. EVALUATION

None

J. CREDIT BY EXAMINATION

None