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Economics 3006/6106 Prof.

Spring 2008 VBT 448, 885-3301 TTh 11:00-12 noon
M 5:30- 6:30 p.m.


Macroeconomics concerns the study of the economy as a whole: the determinants of

living standards, the rate of inflation, and the unemployment rate. Macroeconomics can
be studied by academics at a very theoretical level or by business consultants who seek to
understand the practical realities that confront companies.

This course will be taught more from the standpoint of businesspeople, but it will be seen
that even a quite practical understanding of the macroeconomy requires knowledge of a
great deal of theory.

There will not be a textbook for the course. All readings will be posted on BlackBoard
during the course.

Students will be evaluated primarily on the basis of three exams: two midterms and a
final. Each midterm exam will account for 30 percent of a student’s grade. The final
exam will account for 40 percent. Classroom attendance and participation can be used to
adjust grades up or down. Chronic tardiness or unannounced, early departures from
classes can also affect a student’s grade.

The first midterm exam will be on Tuesday, April 29. The second midterm exam will be
on Thursday, May 29. The final exam will take place at the official time indicated at the
university’s website.

The early readings should be done as soon as possible. They concern efforts to assess
people’s subjective well-being (happiness or “life satisfaction”) as well as their material
living standards.

Introduction: Measurement, Subjectivity, and the Knowledge Problem

Objective and Subjective Assessments of Well-Being
Central Bank Management vs. Free Market Money
Inflation: Monetary Considerations, the Consumer Price Index, and More Comprehensive
Price Indices
Unemployment: Involuntary or voluntary? “Full” employment
Theories of the Business Cycle

The Phillips Curve

The Short-Term Trade-off
Long-Term Unemployment and Inflation

The Long-Term Growth of Living Standards

Exogenous and Endogenous Growth Theories
Conditional Convergence
“Economic Miracles” vs. Economic “Basket Cases”

Special Topics
IQ and Living Standards
Flat-Rate Tax Systems in Central and Eastern Europe
Marriage and Living Standards