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STATE UNIVERSITY OF NEW YORK AT BUFFALO DEPARTMENT OF ECONOMICS Fall 2011 ECO507 Macroeconomic Theory Instructor: Dr. Z.

Liu Office: 445 Fronczak Hall Tel: 716-645-8688 Office hours: Monday and Wednesday 2:30 to 3:30 pm and by appointment

Objectives: The course is designed to acquaint students with the basic analytical tools and principles of Macroeconomics. The primary goals are to understand major macroeconomic issues and to evaluate various macroeconomic policies. To accomplish this, a strong emphasis will be placed on the concepts and methodology of economics as a science. At the same time, an equal emphasis will be placed on macroeconomic problems in the real world. Prerequisite: Some knowledge of algebra and calculus.

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Course Website: The URL for this course is http://ublearns.buffalo.edu. Students are advised to check the website on a regular basis because lecture outlines, assignments, and newspaper articles will be posted there. Please read the first page for login information. Online help can be found at http://wings.buffalo.edu/services/ublearns/faq.html. Exams and Problem Sets: There will be one midterm exam covering roughly parts I and II of the course outline given below, and a final exam which will emphasize, but will not be restricted to, the remaining course materials. The midterm is scheduled to take place on October 17. In addition to the two exams, there will be five problem sets. Students are encouraged to work in groups on these assignments, but writing and submission (if and when required) must be done individually. Some of the questions may appear in the exams. Therefore, it is to your interest to take them seriously. Grading Policy: Midterm Exam 40%, Final Exam 45%, and Assignment 15% Distribution: 85A, A-100, 70B+, B, B-<85, 60C+, C, C-70, 50D<60, and F<50.

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Text: The required text is Andrew B. Abel, Ben S. Bernanke, and Dean Croushore, Macroeconomics, latest edition, Addison-Wesley. The text is intended to supplement the discussions provided in the lecture and therefore is not a perfect substitute for the lecture. Every student should make an effort to attend all the lectures. Two useful reference books (not required) are (1) Robert J. Barro, Macroeconomics, MIT Press; (2) N. Gregory Mankiw, Macroeconomics, Worth Publisher.

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Makeup Exam Policy: a makeup exam may be arranged only for students who miss the exam because of illness or family emergency. In either case, proper documents are required. Academic Integrity: visit http://academicintegrity.buffalo.edu/ Course Outline: Part I: Introduction What is Macroeconomics (Chapter 1) The Measurement and Structure of the National Economy (Chapter 2) Part II: Long-run Economic Performance

Productivity, Output, and Employment (Chapter 3) Consumption, Saving, and Investment (Chapter 4) Saving and Investment in the Open Economy (Chapter 5) Long-run Economic Growth (Chapter 6) The Asset Market, Money, and Prices (Chapter 7) Part III: Business Cycles

Part IV: Macroeconomic Policy

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Unemployment and Inflation (Chapter 12) Monetary Policy and the Federal Reserve System (Chapter 13) Government Spending and its Financing (Chapter 15)

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Business Cycles (Chapter 8) The IS-LM/AD-AS Model (Chapter 9) Classical Business Cycle Analysis (Chapter 10) Keynesian Explanation of Business Cycles (Chapter 11)

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