UNIVERSITY OF WATERLOO
Department of Economics
Term and Year of Offering: Spring 2014
Class Number:
Subject:
Course Number:
Section:
Campus:
Title:

2219
Economics
202
002
UW
Macroeconomic Theory 1

Lecture Times:
Building:
Room Number:

Tue. and Thur. 2:30 – 3:50 p.m.
RCH
302

Instructor:
Office Location:
Office Hours:

M. Vaughan
HH 102
Wed. 10:30 – 11:30 a.m. and Thur. 9:30 –
11:30 a.m. or by appointment. mvaughan@uwaterloo.ca; ext. 36825

Contact:

 When sending email, “Econ 202” must appear in the subject line and the message must include your full name and ID number.
Web Page: http://economics.uwaterloo.ca/mary-ann-vaughan

Where to find this course outline: This course outline will be available at two locations for the duration of the term:
1. Department of Economics website: http://economics.uwaterloo.ca/courses 2. LEARN website: http://learn.uwaterloo.ca
Course Description:
This course is designed to provide students with a solid command of intermediate macroeconomic theory as a tool for understanding how the Canadian economy behaves as a whole.
Topics included for discussion are the determination of national income/output, the determinants of the price level and inflation, determinants of the interest rate and the trade balance, theoretical models of the economy, and basic assumptions of the long run and the short run. Aside from learning theories, the course also provides students with analytical skills necessary to the analysis and interpretation of real-world macroeconomic issues. Course Objectives: At the end of the course you should be able to:
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Understand the methods and approaches to macroeconomics.
Understand the factors which determine aggregate output as well as income and expenditure in the long run and the determination of the real interest rate.
Understand the long-run determinants of the price level and the inflation rate.
Understand the long-run determinants of an economy’s international trade balance and the level of net capital outflow.

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Use the Aggregate Demand/Aggregate Supply model to explain short-run fluctuations.
Use the IS/LM model to study the impact of monetary and fiscal policies on the economy in the short run.
Understand aggregate demand under both flexible and floating exchange rates.
Understand the trade-off between inflation and unemployment in the short run.

Required Text:
Mankiw, N. Gregory and William Scarth,
Macroeconomics, Fourth Canadian Edition.
New York, N.Y.: Worth Publishers, 2011.
Optional Study Guide:
Kaufman, Roger T. and William Scarth,
Student Guide and Workbook for Macroeconomics, 4th
Canadian Edition.
New York, N.Y.: Worth Publishers, 2011.
Additional Resources Available on Learn:
The lecture overhead slides are posted on LEARN
(http://learn.uwaterloo.ca) at:
1145
Econ 202
Spring 2014
 The Learn site is down occasionally. Download the slides to your computer. Always be prepared!
 Students writing tests and exams are responsible for saving course materials on Learn before the access to their courses is shut off (normally on the first day of classes of the next term.) Course Outline
Part I

Introduction

Chapter 1

The Science of Macroeconomics

Chapter 2

The Data of Macroeconomics
Omit Unemployment, GDP, and Okun’s Law, pgs.41 – 43.

Part II

Classical Theory: The Economy in the Long
Run

Chapter 3

National Income: Where It Comes From and
Where It Goes
Omit The Cobb-Douglas Production Function, pgs.60 - 62.

Chapter 4

Money and Inflation
Omit 4-7 Hyperinflation pgs.115-121, Appendix

Chapter 5

The Open Economy
Omit Appendix

Chapter 6

Unemployment
Omit 6-5 Labour Market Experience: Europe pgs.196-202, Appendix

Part IV

Business Cycle Theory: The Economy in the
Short Run

Chapter 9

Introduction to Economic Fluctuations

Chapter 10

Aggregate Demand I: Building the IS/LM Model
Omit A Loanable-Funds Interpretation of the IS
Curve pgs. 330-331

Chapter 11

Aggregate Demand II: Applying the IS/LM
Model
Omit 11-3 The Great Depression