# ECON 305

## Intermediate Macroeconomic Theory ECON 305 (4)

ECON 305 covers concepts and methods of analysis of macroeconomic variables -- consumption, investment, government and foreign trade. Classical and Keynesian models compared; analysis of economic statics and dynamics. Prerequisite: ECON 201 with a minimum grade of C-; 60 units. Students with a minimum grade of A- in ECON 103 and 105 at Simon Fraser University at their first attempt can complete ECON 305 concurrently with ECON 201 after 30 units. Students seeking permission to enroll on this basis must contact the undergraduate advisor in economics. Quantitative.

*Note: I = skill to be introduced in the course, D = skill to be further developed

#### Analyze and Interpret economic models

Solve and interpret standard models of consumer behavior

• Define and calculate marginal utility and the marginal rate of substitution (I)
• Explain the role of expectations in consumer and firm choices (I)

Solve and interpret standard models of producer behavior

• Define and calculate marginal product and marginal rate of transformation (I)

Solve and interpret standard models of market interaction

• Calculate and interpret present values and net present values (I)
• Describe the interactions between various monetary assets (eg \$ bills vs bank deposits, \$ bills vs bitcoin) (I)
• Describe the Taylor principle of interest-rate setting, and why it is important (I)
• Describe the theory of Ricardian equivalence and its limitations in practice (I)
• Use a dynamic macroeconomic model to predict the response of macroeconomic variables to econ (I)
• Aggregate individual demands to market demand (I)
• Calculate and interpret the growth rate of total factor productivity (Solow residual) (D)
• Describe the characteristics of monetary assets (i.e., what makes money money) (D)
• Describe the quantity theory of money, its implications, and whether it fits the evidence (D)
• Describe the theory of purchasing power parity, its implications, and whether it fits the evidence (D)
• Explain the implications of diminishing vs. constant returns to capital for long-run growth (D)
• Use a one-period macroeconomic model to predict the response of macroeconomic variables to economic conditions and policy actions (D)
• Use supply and demand (liquidity preference?) to describe the relationship between the money supply and interest rates (D)
• Write and interpret the neoclassical aggregate production function (D)
• Calculate and interpret the effect of government fiscal policy on deficits, debt, national savings, and investment (D)
• Calculate growth rates from levels, and levels from growth rates (D)
• Describe the leading explanations for observed cross-country and time-series patterns in long-run growth (D)
• Distinguish between the short run and the long run (D)
• Identify the potential costs of inflation, deflation, and disinflation (D)
• Use supply and demand (labour market) to identify the determinants of employment and/or unemployment (D)
• Use supply and demand (loanable funds) to identify the determinants of interest rates, savings, and investment (D)

#### Analyze and Interpret economic data

Interpret key economic data

• Identify the empirical impications of a macroeconomics model and compare them to data (I)
• Calculate and interpret the growth rate of total factor productivity (Solow residual) (I)
• Calculate and interpret the unemployment rate and labour force participation rate (D)
• Calculate real and nominal GDP and their expenditure components in a simple economy (D)
• Calculate the CPI, GDP deflator, and inflation rate in a simple economy (D)
• Describe concepts, methodology and limitations in the main macroeconomic statistics (D)

Interpret statistical evidence and methodology

• Describe standard methods for distinguishing trend from cycle in macroeconomic time series (I)

#### Critically assess economic arguments, assumptions, and evidence

Discuss the role of theory, evidence, and measurement in economic analysis

• Describe the scientific method and its role in economics (D)

Critically evaluate assumptions in economic/econometric models

• Distinguish long-run and short-run demand/supply curves, understand how they change systematically (I)
• Explain the role of assumptions in economic models (D)
• Understand limited role of GDP as a measure of production (versus wealth, versus welfare) (D)

Compare and critically evaluate economic arguments

• Identify and critique the leading explanations for the business cycle (I)
• Distinguish between different explanations for unemployment (D)

#### Use economic concepts to understand real-world human activity and public policy

Apply economics to everyday situations

• Predict the economy's response to changes in market conditions (D)

Use economics to evaluate specific policies

• Discuss the arguments for and against active stabilization policy (D)
• Discuss the arguments for fixed versus flexible exchange rates (D)
• Discuss the arguments for monetary versus fiscal policy (D)
• Explain the zero lower bound problem and the use of unconventional monetary instruments (D)
• Identify exchange rate policy choices and evaluate their consequences (D)
• Identify fiscal policy choices and evaluate their consequences (D)
• Identify monetary policy choices and evaluate their consequences (D)
• Evaluate policies and factors that influence long-run growth (D)

Evaluate current events using tools of economics

• Evaluate current events as they relate to the general course content (D)

Describe and analyze important economic institutions, events, and results

Describe important institutions in the economy and their roles

• Describe the rationale for central bank independence, and the relationships between fiscal and monetary policy (I)
• Define money and describe its primary roles in the economy (I)
• Describe the Bank of Canada and its role in the economy (I)
• Describe and explain key aspects of fiat, commodity-based and digital currencies (I)
• Describe the characteristics of a bank run and the potential role of the lender of last resort (D)

Describe important events in economic history and their current relevance

• Describe key aspects of the industrial and demographic revolutions, and their link to modern development policy (I)
• Describe and explain key aspects of the gold standard, Great Depression, 1970's inflation episode, and 2008 financial crisis (D)
• Describe important cross-country patterns in long-run growth (D)
• Describe important patterns and events in Canada's main macroeconomic time series (D)
ECON 305 Educational Goals.pdf
Educational Goals ECON 305