Assignments and Notes

Exam I covers the material to this point.
Self-test material which is linked to above may be useful for later reference, so I repeat the links to the True/False questions and below:

Self-test Questions on Supply and Demand -- Answers
Self-test Questions on GDP and Unemployment -- Answers
Self-test Questions on Price Indexes and inflation -- Answers

Exam II will review much of the preceding material, and cover:

Gross Domestic Product
Consumer Price Indexes
Unemployment
and Keynesian Macroeconomics

Self-test for Exam 2 -- Answers

The final exam will include the exam II material and add:

Money, Banking and Monetary Policy
(there is more to this than may appear -- click through!)

For the Final, note that material covered on exam 2 will be covered on the final as well. Also add material on:

Aggregate Demand (Chapter 12, including appendix).

Aggregate Supply (Chapters 13 and 14)

Deficits and Debt (Chapter 15)

Final Practice Questions -- Answers

Unit 1 -- Introduction

Introduction to Macroeconomics
- The Circular Flow
Examples of Graphs in Economics
Supply and Demand

Unit 2 -- GDP, CPI, Inflation and Unemployment

GDP

National Income and Product Accounts
Problems on GDP and Unemployment
Commission on the Measurement of Economic Performance and Social Progress , with Joseph Stiglitz, Amaryta Sen and others. Discussion of the problems with GDP as a measure of welfare
Beyond GDP? Welfare Across Countries and Time by Charles I. Jones and Peter Klenow. Stanford Working Paper, Sept. 2010. See the slides for a brief summary.
More on GDP

Price Indexes

The Cost of Living Important definitions.
Calculating Price Indexes My detailed explanation of how to calculate price indexes.
Problems on the CPI and Inflation
Fisher Effect My detailed example of the Fisher Effect -- how inflation affects the distribution of income.
Seeing Inflation Only in the Prices that Go Up by David Leonhardt, New York Times, May 7, 2008. A good article on why the CPI doesn't always reflect our sense of inflation. See also the graphics attached:
- All of Inflation's Little Parts
- Not Everything is More Expensive
- Google Plans Alternative Inflation Index Using Web Data by Robin Harding. Note that the weights reflect Web sales -- housing is only 18 percent of the Google Price Index, but 40 percent of the CPI.
- Do We Need Google to Measure Inflation? by Annie Lowrey, Slate, Dec. 20, 2010. Think about what prices the Google project might NOT be capturing.
- The Billion Prices Project @ MIT A project directed by Roberto Rigobon and Alberto Cavallo of MIT, tracking 5 million items over 70 countries.
How Fake Money Saved Brazil Chana Joffe-Walt, National Public Radio's Planet Money October 4, 2010.
Brazil's Macroeconomic Performance in the 1990s by Armando Castelar Pinheiro, Fabio Giambiagi, Joana Gostkorzewicz. Brazilian Bank for Development
CPI -- BLS page
- Common Misconceptions on the CPI See Addressing misconceptions about the Consumer Price Index by John S. Greenlees and Robert B. McClelland, Monthly Labor Review , Aug. 2008, for more detail.
- CPI Research Series Using Current Methods (CPI-U-RS) for information on how recent revisions impact past reports of inflation
- Handbook of Methods Chapter 17, gives a very detailed account of the CPI.
Trimmed Mean PCE Inflation by Jim Dolmas, FRB Dallas, 2005.

Unemployment

Definitions How unemployment is calculated, and how it impacts the economy.
- Unemployment Rate Falls to 9.7 %, But 20,000 Jobs Were Lost ? by Daniel Individglio, The Atlantic , Feb. 5, 2010.
- Unemployment Falls, but Job Losses Continue by John Ydstie and Linda Wertheimer, NPR.org, Feb. 5, 2010.
Alternative Measures of Labor Underutilization Link to the latest data.
- The Unemployment Rate and Beyond: Alternative Measures of Labor Underutilization Department of Labor, Bureau of Labor Statistics, Issues in Labor Statistics , Summary 08-06, June, 2008.
- Measures of Labor Underutilization from the Current Population Survey by Steven E.Haugen, BLS, Working Paper 424, March 2009. A longer but very interesting discussion of the "unemployment rate" in historical perspective.
- Measurement of Unemployment by Katherine Bradbury, Public Policy Brief No. 06-2 from the Federal Reserve Bank of Boston. Draft of article published in the Palgrave Dictionary of Economics . Good on international measures and how they differ.
- Mass Layoff Statistics
- NObel Prize in Economics, 2010 . Peter Diamond, Dale Mortensen, and Christopher Pissarides, for their work on job search and unemployment.
  - Information for the Public -- a brief summary of their work.
  - Markets with Search Frictions a more detailed overview of their work.

Economic Growth -- Taylor chap. 22

Monetary Policy Objectives and Tools in a Low-Inflation Environment , Ben Bernanke, Chairman, Federal Reserve Board of Governors. October 15, 2010.

Unit 3 -- Keynesian Economics

Chapter 12 -- Short Run Economic Fluctuations
Chapter 13 -- Aggregate Demand
- The Great Depression Be sure to visit the photoessay and the art gallery.
- The Great Depression in Nanty Glo
- Fiscal Policy in the Shadow of the Great Depression by Brad deLong, working paper, 1996.
- Powerpoints on Aggregate Demand
- GDP in the Recession, 2007-2010
- Mugged by the Moralizers by Paul Krugman, New York Times, dated Oct. 31, 2010, published November 1, 2010. (Update to the Paradox of Thrift).
- Problems for review

The topics in Units 1 and 2 above will be covered in the Midterm examination.
Make sure you have a firm grasp of the definitions, and of how to do the problems covered above.

Unit 4 -- Savings, Money and Financial Markets, Monetary Policy

Money and the Federal Reserve
- PowerPoints on Money
- Yapping About Money The Stone Money of Yap. C
- The Economic Organization of a P.O.W. Camp by R.A. Radford, Economica, 12:48(Nov.1945), pp. 189-201.
- Money Stock Measures
- Aggregate Reserves and the Monetary Base
- Assets and Liabilities of Commercial Banks
- Answers to exercises, Bernanke chap. 14
Monetary Policy
- Five Myths about the Fed by Greg Ip.
  Very good summary of quantitative easing. This is an assigned reading.
- Powerpoints on Monetary Policy
  Policy tools of the Fed:
  Other activities of the Fed:
  - Bank for International Settlements , Other Central Banks and Foreign Banks
- Federal Reserve Policies in the Financial Crisis Speech by Ben Bernanke, Dec. 1, 2008. Clear summary of the actions of the Fed in responding to the crisis -- print and study carefully. Other relevant links to recent policy changes:
  - JP Morgan sees Fed cutting rates to zero in January Reuters, Dec. 1, 2008.
    See also The Humbling of the Fed by Paul Krugman, NY Times , Sept. 22, 2008.More technical is Thinking about the Liquidity Trap by Paul Krugman, Working Paper, MIT, Dec. 1999. And Monetary Policy in Deflation: The Liquidity Trap in History and Practice by Athanasios Orphanides, Fed. Reserve working paper, Dec. 2003 is also interesting.
  - Term Auction Facility Introduced Dec. 12, 2007 to provide longer-term (24 or 84-days) loans than the discount window; became the principal instrument of monetary policy in 2008. See Understanding Fed Lending from the New York Fed for a fuller explanation.
  - Interest on reserve balances Announced 6 Oct. 2008; referenced in Bernanke's speech above.
    See FAQs on interest on reserves for why this is a good idea.
  Not in textbooks, but in
Financial Markets and Capital Flows
- Answers to Chapter exercises
- NYSE data
- IPO data (Hoover's)
  The IPO Scorecard gives aggregate figures and list of best performers.
- Bond Markets
- Bond ratings of countries and of states of the US. Note that California's bond rating is exactly the same as Libya's -- they can both pay if they want to.
- Bond Market -- Current trades
- Treasury Bills (3 months) -- last auction

Problems for review (from Bernanke's textbook)