Professional Documents
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Text, Reading materials, etc: the main textbook is Economics Samuelson and Nordhaus; 19th Edition.
There shall be supplementary readings from books, newspapers, and a journal or two.
In the following paragraphs, I give some sort of an annotated outline:
The first few lectures cover some basic universal premises in economics: law of scarcity; factors of
production; logical fallacies such as the fallacy of composition; post hoc fallacy and their applicability in
economics; the what, how and for whom problems; positive vs. normative economics. Graphs are then
introduced; the pp curve.increasing cost; constant cost; decreasing cost; the assumptions behind this
curve and any curve we draw in economics and the significance of the assumptions. Then applications
of the pp curve; e.g. in environmental economics; rich and poor countries; capital and labour, etc.
Next; the meaning of market as distinct from market-place; and full discussion of a perfectly
competitive market and why we study it. The Invisible hand of Adam Smith and the visible hand of the
governmentthe economic role of the government in a market economy and reference to Egypt would
be well worth it and how Egypt has faltered in that in the last few decades. The process of capital
accumulation.sacrifice of present consumptionthe capital good.the time it takesthen more future
consumption as the essence of growth.
Following this, the microeconomic foundations of macroeconomics will to be discussed by analyzing
Supply and Demand each in detail and how they interactthe concept of the equilibrium price and the
significance of exante analysis i.e. e.g. in demand what one is willing to go on demanding NOT the
expost sense which refers to the past the actual or the realized, because at any price the quantity
demanded is the quantity supplied.
Then come the heart of macroeconomics: GDP; NDP; NI; PI; DI. To be explained in detail. And when to
use eache.g. if I am interested in growth I look at NDP ; If I want to have a notion of Employment (N ),
I look at GDP and why; If I am interested in consumer welfare I look at PIetc. etc. for the rest. Then a
discussion of the statistical and conceptual problems in National Income Accounting: Is a carpenters
hammer an intermediate good or a final good? The sale of a Picasso painting? Services of housewives?
Etc. etc. Then analysis of inter-country comparisons of GDP
Then a look at specific macro variables: If Y = C + I in a closed economy with no G and no trade, take C:
the consumption function alone and analyze it a la Keynes, explaining the objective factors and the
subjective factors that cause it to shift; how to derive the S function from it consider that it is a mirror
image.MPC and MPS..uses of MPC.. graphs and equations must accompany the consumption
function; A linear consumption function. APC and APS.discussion of the national or long run
consumption function. Permanent Income and life cycle modesAre they really new..Can we trace
them in Keynes?
Then the Investment function in detail with graphs and factors that affect
investment..Business cyclesif consumption is fairly predictable, Investment is volatile and it is the
real devil behind GDP fluctuations.
Then the tough lecture on S and I. The cleavage between saving and investment; saving and
investment are done by different people for different reasons. The Accounting equality of S and I; The
behavioral equality of S and I. S and I are always equal. S and I are only equal in equilibrium. Are
these two statements contradictory? Explain your answer
This is a major question where the
instructor has to prepare himself or herself very well to lecture on it. Integral in the explanation is the
exante analysis and the expost analysis. Income determination using S and I is the method used by
Keyness followers He had the previous method of AED on the Y axis and Y on the X axis.
Then the multiplier theorem in detail, using also a graphthe formula.some assumptions..its
applicability.
Then the Money and Banking aspect of the courseMoney in detail.barterevolution of
moneyfunctions of moneyorigin of banks..functions of banks.the central bank and its functions.
Then the money marketthe L function and the M functioninterest rate determinationexplain in
detail shape of the L function and the liquidity trap.a solid lecture on the interest rate.historical and
analytical
Then the inflationary gaps and the deflationary gapsgraphsA detailed discussion of the efficacy of
monetary policy in curing a depression.how it affects M .M should affect interest rate (r) in a certain
way..does it do sothen r should affect I in a certain way.how may it failand if so we shall never
reach Y .. M - r
- I - Y. and how fiscal policy can come to the rescuetalk a lot about
Keynes and how fiscal policy can be direct in its impact.
Then Phillips curve; Stagflation and its curve; The quantity theory of money and analyze it algebraically
in the short run and the long run..Then a major lecture on the paradox of thrift.How an attempt by
all individual to save more may actually result in the whole community saving less not easy to answer.
And a diagram is required.
Time permitting a few words on growth theory; international trade and economic development
Other policies: citation style will be explained to you by my three colleagues, attendance is a must; prior
notice should be given to the professor in case of absence, not after the fact. Academic integrity is
emphasized at least as much as studying for the course itself and students must read AUCs code of
academic integrity. If there are items in that they want clarified, they must contact the professor. All the
students in this course must abide by this code.
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