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Introduction to Economics

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Session: 

  • Session B: July 27 – August 6, 2020

Time: 

  • 9:30 a.m. - 12 p.m.

Category: 

  • Philosophy and Society

Instructor: 

  • Dick Oosthuizen
Module Description: 

Introduction to Economics will survey introductory concepts in economics, emphasizing key topics in microeconomics and macroeconomics. This will allow students to use economic arguments as often used in debates about government policies, discussion of business strategies, and many other arenas in life. The goal of the course is to teach students to “think like an economist,” which I hope will help them to understand the world around you, make better economic decisions in life, and be a more informed citizen and voter. To achieve this goal, the course will combine lectures and recitations. Lectures are used to introduce concepts generally, convey the big picture, and talk about economics, the world, the news and current events. Recitations are used to review concepts and solve examples, and to discuss economic policy questions. Note that all sessions involving lectures and recitations will be synchronous through Zoom. Additional exercises given as practice material will be discussed through recordings if necessary.

Economics is the study of how society allocates its scarce resources. Microeconomics is the study of the behavior of households and firms, whose collective decisions determine how resources are allocated in a free market economy. We will study when markets are likely to produce “efficient” outcomes, and when government intervention may improve or harm the competitive market outcome. We will use economic theory to analyze issues like a gas tax to change reliance on oil, minimum wages to increase salaries of the working class, and government subsidies to increase education. Macroeconomics is the study of the economy as a whole. We will understand how the size of the US economy is determined, how unemployment is measured, and how inflation affects everyday life, among other areas. We will study policy options that the government and the Federal Reserve Bank consider, and discuss the pros and cons of their actions.

Goals for students

  • To gain a broad understanding of  economics in general.
  • To get a grasp on how to use economic arguments as seen in daily newspaper articles, as well as more advanced text excerpts.
  • To distinguish key fields in economics, and to know the basic arguments used in each of them, such as microeconomics, macroeconomics and (a slight exposure to) finance.
  • To expose them to areas of research, possible careers, and learning opportunities within the

    field of economics, such as a possible Bachelor’s and Master’s degree after high school.

The reference books for the lectures will be:

  • Principles of Microeconomics, 7th Edition, by N. Gregory Mankiw.
  • Principles of Macroeconomics, 8th Edition, by N. Gregory Mankiw.
  • Hubbard and O’Brien, Economics, 7th edition

I do not expect the students to buy these books, as they will be used for reference material. The slides are leading: they are self-contained and provide references to further readings if the students have questions. In this way, the students can read the background material if it helps them to understand the lecture better, but it is not necessary.

Possible assignments

Homework Exercises

Students will be expected to prepare a few questions before each meeting to stimulate discussions during recitations regarding the relevant content. Students will work in groups of 2-4 on these problems. These problems are based on the material in the lectures and relevant accessible discussion articles, to be handed out after the recitations after students are first exposed to the relevant material. They will be expected to have solved the problems the next day so we can discuss solutions. I will not be grading these homework exercises, but I do expect each student to prepare the problems and actively participate in discussing them.

Group research projects

If possible, students are invited to write discussions about relevant economic policy decisions. Why did the Federal Reserve make the decision to increase the money supply? According to recent literature, was the timing correct? How did Europe do? Or: What caused the Great Recession, and are we on the brink of another crisis? Why or why not? What are the risk factors involved? The idea for them is NOT to dive deep into the literature and construct advanced proofs regarding each statement. Instead, they are asked to review a select amount of discussion articles which will be very accessible to them. Based on these articles, they are invited to write a short summary of their findings, and what areas they think should be explored in the future. I expect a discussion of a contemporary economic policy debate, applying economic intuition to the problem at hand. If you cannot find a topic, suggestions will be given. On day 9, students will present their topics and research.

Journals

In addition to readings, students are encouraged to read on the internet, such as Bloomberg, The Economist, WallStreetJournal, or a financial newspaper for 20-30 minutes a day. The goal of this exercise is for them to be exposed to different aspects of Economics and Finance, and be up to date about the current developments. I will advise some articles each day.

Readings discussions: Day 5

Students will be assigned readings for class discussion, relating to policy questions. Readings may include excerpts from the internet and books related to their chosen project topic.

Introduction to Economics Module Draft Syllabus

Basic Schedule each day:

  • Discuss homework exercises from previous day (max. 30 minutes)
  • Discuss new material
  • Solve in class problems relating to new material

Very preliminary outline (depending on the speed of the lectures):

Day 1: Introduction to Economics (Reference: Chapters 1-3 of Principles of Microeconomics)

  • Principles of Economics
  • Microeconomics
  • Macroeconomics
  • Interdependence and Gains from trade

Day 2: Microeconomics I (Reference: Chapters 4-5 of Principles of Microeconomics)

  • Supply and Demand
  • Elasticity of Demand
  • Elasticity of Supply

Day 3: Microeconomics II (Reference: Chapter 7 of Principles of Microeconomics)

  • Consumer Surplus
  • Producer Surplus
  • Extra (if time allows): Deadweight Loss (Chapter 7 and 8 of Principles of Microeconomics)

Day 4: Microeconomics III (Reference: Chapter 13 and 14 of Principles of Microeconomics)

Economic Efficiency

  • The Firm: Technology, Production & Costs
  • Firms in Perfect Competition
  • Extra (if time allows) Monopoly (Chapter 15 of Principles of Microeconomics)

Day 5: Recap material and Group research projects

  • Recap material so far
  • Check on group projects, allow students to meet in their groups and review progress.
  • Readings discussions relating to group projects topics chosen by students.

Day 6: Macroeconomics I (Reference:  Chapter 10 and 11 of Principles of Macroeconomics)

  • GDP: Measuring Total Production & Income
  • Inflation

Day 7: Macroeconomics II (Reference:  Chapter 15 of Principles of Macroeconomics)

  • Unemployment
  • Extra (if time allows) Tools of Finance (Reference: Chapter 14 of Principles of Macroeconomics)

Day 8: Macroeconomics III (Reference: Chapter 16 of Principles of Macroeconomics)

  • Money, Banks and the Monetary System

    Extra if time: (Reference: Chapter 17 of Principles of Macroeconomics)
  • Monetary Policy and the Money Market in the Short-Run
  • Money in the Long Run

Day 9: Presentation of projects and evaluations

  • Recap material so far
  • Each group has a fixed amount of minutes, with questions for presentations.

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