Course Code and name

ECO 237    Macroeconomic Theory I

Course Type

Compulsory

Course Credit

3 0 3

ECTS Credit

6

Lecturer

Assist. Prof. Lütfi ERDEN

Pre-requisite(s)

None

Course Length

1 Semester /   3 hours each week

Course Content

I-                   What is Macroeconomics?

-         Basic concepts and concerns of macroeconomics

II-                National income accounting

-         Different ways to measuring economic performance (Value added, income and expenditure)

-         Circular Flow Diagram

-         Accounting Identities

-         Price Indices

-         Definitions of GDP, GNP, NI, Personal income

III-              Economy in the long run (Classical Model)

-         Output and employment determination

-         The roles of flexible wages and prices assumptions

-         Deriving the long run AS curve (Definitions of full employment and potential output)

-         The Quantity theory of money (Monetary neutrality)

-         Deriving the AD curve

-         The stabilizing role of interest rate

-         Policy implications of the Classical Model

IV-             Economy in the short run (Keynesian Model)

-         Understanding the business cycles in the short run

-         Realized (actual) and Planned (desired) expenditures (Keynesian Cross)

-         Autonomous expenditure multipliers

-         Deriving the IS curve

-         Keynesian theory of money demand (Liquidity Preference Theory)

-         Deriving the LM curve

-         A modern interpretation of the Keynesian System (The IS-LM Model)

-         National income determination

-         Analyzing the effects of monetary and fiscal policies (Liquidity trap; Crowding-out)

-         Policy mix

-         Relative effectiveness of monetary and fiscal policies

-         Deriving the AD curve using the IS-LM model

-         The short run AS curve (Sticky prices)

V-                The AD-AS Model

-         Shocks to the AD and AS curves and their impacts in the Classical and Keynesian models

-         A comparison of the Classical and Keynesian models

Course Objective and Fulfillments to be obtained by Students

 

The central objective of this course is to teach how national income, employment level and prices are determined according to the Classicals and Keynesians. At the end of this course, students are expected to learn systematic ways of thinking about macroeconomic issues and the role of government on economy, and critically evaluate practical macroeconomic problems.

References

 

1) Macroeconomics: Theories and Policies by Richard Froyen, Prentice Hall

2) Macroeconomics by Dornbusch, Fischer and Startz, MacGraw Hill

3) Macroeconomics by Mankiw, Worth

Teaching Method

 

Lecture and problem sessions

Assessment Method

1 Midterm (40%) and 1 Final Exam (60%)

Instruction Language

English