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Instructor - Robert F. Mulligan

"Practical men, who believe themselves exempt from any intellectual influences, are usually the slaves of some defunct economist.  Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” - John Maynard Keynes

Office hours MWF 10:00-11:00 PM or by appointment.  I am always happy to talk to students outside my scheduled hours.  Feel free to drop in without an appointment, but if you are coming from off campus, call or email first to make sure I will be available.


Offices – Forsyth 224A, phone - (828) 227-3329  Camp 110C, phone – (828) 227-3173. 


1. Text - Macroeconomics, McConnell, Brue, & Flynn, 20th edition.


Red Zone Campaign


Western Carolina University supports its campus community members in their right to healthy, happy, consensual relationships and is dedicated to developing a culture of respect and nonviolence. Early in the first and second year at college, students enter the “Red Zone,” where they are more at-risk for unwanted sexual experiences on college campuses. And, according to NCHA 2013 data, 16.0% of WCU men and women indicated being in an emotionally, physically, or sexually abusive relationship in the past 12 months. As a result, the Red Zone Campaign encourages and empowers students, faculty, and staff to develop an open dialogue on the dangers of sexual violence and to speak up when they see violent behavior occurring.


If you notice red flags in yours or a friend’s relationship, are experiencing violence or have in the past, you have a number of resources available to you:

• Counseling and Psychological Services (828.227.7469 or

• REACH of Macon County services in Jackson County (828.586.8969 or

To report a crime, please contact University Police at 828.227.8911 (Emergency line).

For more information, please visit or contact Sarah Carter at


Office of Disability Services

Accommodations for Students with Disabilities: Western Carolina University is committed to providing equal educational opportunities for students with documented disabilities and/or medical conditions.  Students who require reasonable accommodations must identify themselves as having a disability and/or medical condition and provide current diagnostic documentation to the Office of Disability Services.  All information is confidential.  Please contact the Office of Disability Services at (828) 227-3886 or come by Suite 135 Killian Annex for an appointment.


Student Support Services

Student Support Services provides support to students who are either first-generation, low-income or those who have disclosed a disability with: academic advising, mentoring, one-on-one tutorial support, and workshops focused on career, financial aid and graduate school preparation. You may contact SSS at (828) 227-7127 or email for more information. SSS is located in the Killian Annex, room 138.


Writing and Learning Commons (WaLC)

The Writing and Learning Commons (WaLC), located in BELK 207, provides free course tutoring, writing tutoring, academic skills consultations, international student consultations, graduate and professional exam preparation resources, and online writing and learning resources for all students.  All tutoring sessions take place in the WaLC or in designated classrooms on campus. To schedule tutoring appointments, visit the WaLC homepage ( or call 828-227-2274. Distance students and students taking classes at Biltmore Park are encouraged to use Smarthinking and the WaLC’s online resources. Writing tutoring is offered at the Biltmore Park campus on certain days of the week; call 828-227-2274 for availabilities.


Academic Calendar includes dates for all breaks, university closures, final exams, etc.  The academic calendar can be found at:



2. Course Objectives

"The world consists of facts, not of things." - Ludwig Wittgenstein

          "Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." (Lionel Robbins, Essay on the Nature and Significance of Economic Science, 1932).  Note that economics is about human behavior, not about money.  It studies how we act to realize our chosen ends given the limitations imposed by scarce means which have alternative uses.  If means don't have alternative uses, there is no choice about which ends they should be used for.  If means are not scarce, they do not impose a limitation on our realizing our wants.


Chapter 14  Money and Banking

                                    1.    List and explain the three functions of money.

                                    2.    Define the money supply: M1 & M2.

                                    3.    Describe the structure of the U.S. banking system.

                                    4.    Explain why Federal Reserve Banks are central, quasi‑public, and bankers’ banks.


Chapter 15  Money Creation

                                    1.    Recount the story of how fractional reserves began with goldsmiths.

                                    2.    Explain the effects of a currency deposit in a checking account on the composition and size of the money supply.

                                    3.    Explain the effects of a bank loan on the composition and size of the money supply.

                                    4.    Explain how the emergence of money in a barter economy is an example of spontaneous order.

                                    5.    Compute a bank’s required and excess reserves when you are given its balance‑sheet figures.

                                    6.    Explain why a commercial bank is required to maintain a reserve and why it isn’t sufficient to cover deposits.

                                    7.    Describe what happens to the money supply when a commercial bank makes a loan or buys securities.

                                    8.    Describe what happens to the money supply when a loan is repaid or a bank sells its securities.

                                    9.    Explain what happens to a commercial bank’s reserves and checkable deposits after it has made a loan.

                                   10.    Describe how a check drawn on one commercial bank and deposited in another will affect the reserves and excess reserves in each bank after the check clears.

                                   11.    Describe what would happen to a single bank’s reserves if it made loans that exceeded its excess reserves.

                                   12.    Explain how it is possible for the banking system to create an amount of money that is a multiple of its excess reserves when no single bank ever creates money greater than its excess reserves.

                                   13.    Compute the size of the money multiplier and the money‑creating potential of the banking system.

                                   14.    Explain that the money multiplier process can also lead to multiple destruction of money.

                                   15.    Interpret the simple money multiplier (deposit expansion multiplier).

(Test 1)

Chapter 16  Interest Rates & Monetary Policy

                                    1.    Identify the goals of monetary policy.

                                    2.    Identify the two types of demand for money and the main determinant of each.

                                    3.    Describe the relationship between GDP and the interest rate and each type of money demand.

                                    4.    Explain what is meant by equilibrium in the money market and the equilibrium rate of interest.

                                    5.    Explain the relationship between bond prices and the money market

                                    6.    List the principal assets and liabilities of the Federal Reserve Banks.

                                    7.    Explain how each of the three tools of monetary policy may be used by the Fed to expand and to contract the money supply.

                                    8.    Explain the relative importance of the monetary policy tools, and why the U.S. is unique in how it can conduct monetary policy.

                                    9.    Describe how the Fed targets the Federal funds rate as part of its monetary policy actions.

                                   10.    Describe expansionary and restrictive monetary policies, and explain why and how they are used.

                                   11.    Explain the Taylor rule and describe how it relates to post 2007 Fed policy.

                                   12.    Explain the cause‑effect chain between monetary policy and changes in equilibrium GDP.

                                   13.    Demonstrate graphically the money market and how a change in the money supply will affect the interest rate.

                                   14.    Show the effects of interest rate changes on investment spending.

                                   15.    Describe the impact of changes in investment on aggregate demand and equilibrium GDP.

                                   16.    Contrast the effects of an expansionary monetary policy with the effects of a restrictive monetary policy.


Chapter 7 National Income Accounting

                                    1.    List the components of GDP in the output (expenditures) approach and in the income approach.

                                    2.    Compute GDP using either the expenditure or income approach when given national income data.

                                    3.    Explain the difference between gross and net investment.

                                    4.    Explain why changes in inventories are investments.

                                    5.    Discuss the relationship between net investment and economic growth.

                                    6.    Compute NDP, NI, PI, and DI when given relevant data.

                                    7.    Find real GDP by adjusting nominal GDP with use of a price index.

                                    8.    Understand shortcomings of GDP as an index of social welfare.

                                    9.    Explain what is meant by the underground economy and state its approximate size in the U.S. and how that compares to other nations.

(Test 2)

Chapter 8  Introduction to Economic Growth and Instability

                                    1.    Define two measures of economic growth.

                                    2.    Explain why growth is a desirable goal.

                                    3.    Identify two main sources of growth.

                                    4.    Explain and apply the “rule of 70.”

                                    5.    Explain what is meant by a business cycle.

                                    6.    Describe the four phases of an idealized business cycle.

                                    7.    Identify two types of non-cyclical fluctuations in business activity.

                                    8.    Describe how innovation and/or random events might cause business cycles. 

                                    9.    Explain why business cycles affect capital and consumer durable goods industries more than non-durable goods and service industries.

                                   10.    Describe how the Bureau of Labor Statistics (BLS) measures unemployment.

                                   11.    Evaluate strengths and limitations of BLS unemployment statistics.

                                   12.    State causes of frictional, cyclical, and structural unemployment.

                                   13.    Identify full employment/the natural rate of unemployment.

                                   14.    Identify the economic costs of unemployment and the groups that bear unusually heavy unemployment burdens.

                                   15.    Define inflation and list two types of inflation.

                                   16.    List three groups who are hurt and two groups who may benefit from unanticipated inflation.

                                   17.    Present three possible effects of inflation on output and employment.

                                   18.    Compare U.S. inflation and unemployment rates to other industrialized nations.


Chapter 10  Basic Macroeconomic Relationships

                                    1.    Describe the income-consumption and income-saving relationships.

                                    2.    Recognize, construct, and explain the consumption and saving schedules.

                                    3.    Identify the determinants of the location of the consumption and saving schedules.

                                    4.    Calculate and differentiate between the average and marginal propensities to consume (and save)—APC, MPC, APS, & MPS.

                                    5.    Draw and interpret the geometric representation of a consumption function and the corresponding saving function.

                                    6.    Explain and interpret the relationships between the algebraic representation of a consumption function and the corresponding saving function.

                                    7.    Given the algebraic representation of a consumption or saving function, write the algebraic representation of the other.

                                    8.    Given the consumption or saving schedule in tabular form, graph the consumption and saving function (the geometric representation) and write the algebraic representations.

                                    9.    Describe the relationship between the interest rate, expected rate of return, and investment.

                                   10.    Identify the determinants of investment and construct an investment demand curve.

                                   11.    Draw and interpret an investment demand curve.

                                   12.    Identify the factors that may cause a shift in the investment demand curve.

                                   13.    Describe reasons investment spending is relatively unstable.

                                   14.    Provide an intuitive explanation of the multiplier effect.

                                   15.    Calculate the multiplier and changes in real GDP from changes in spending given either the MPS or MPC.

                                   16.    Given any one of the following: the MPC, the MPS, and the multipler, calculate and interpret the remaining two.

                                   17.    Given any two of the following: the multiplier, the change in aggregate expenditures, and the change in equilibrium GDP, calculate and interpret the remaining one.

                                   18.    Discuss why the actual multiplier may differ from the theoretical examples.

(Test 3)

Chapter 11  The Aggregate Expenditures Model

                                    1.    Identify the simplifying assumptions of the Aggregate Expenditures (AE) model.

                                    2.    Use the consumption and investment schedules to determine equilibrium GDP.

                                    3.    Explain why above-equilibrium or below-equilibrium GDP will not persist.

                                    4.    Trace the changes in GDP that will occur when there is a discrepancy between saving and planned investment, i.e., when the AE model is out of equilibrium.

                                    5.    Use the multiplier to find changes in GDP resulting from changes in spending.

                                    6.    Explain the impact of positive (or negative) net exports on aggregate expenditures and the equilibrium level of real GDP.

                                    7.    Describe how government purchases affect equilibrium GDP.

                                    8.    Describe how personal taxes affect equilibrium GDP.

                                    9.    Explain why an equal amount of government purchases and taxes will have different impacts on equilibrium GDP in the AE model.

                                   10.    Identify a recessionary expenditure gap and explain how it relates to the U.S. recessions of 2001 and 2007-2009.

                                   11.    Identify an inflationary gap and explain how it relates to the inflationary experience of the late 1970s.


Chapter 12  Aggregate Demand and Aggregate Supply

                                    1.    Define aggregate demand and aggregate supply.

                                    2.    Give three reasons why the aggregate demand curve slopes downward.

                                    3.    Explain how the international trade effect and interest rate effect can be considered substitution effects, even though there is no substitute for GDP.

                                    4.    State the determinants of the aggregate demand curve’s location, and explain how the curve will shift when one of these determinants changes.

                                    5.    Distinguish between an initial shift in aggregate demand and the full shift after multiplier effects have been incorporated.

                                    6.    Explain the shape of the long-run aggregate supply curve.

                                    7.    Explain the shape of the short-run aggregate supply curve.

                                    8.    Indicate the determinants of the aggregate supply curve’s location, and explain how the curve will shift when one of those determinants changes.

                                    9.    Find an economy’s equilibrium price level and real GDP using the AD-AS model.

                                   10.    Explain how the multiplier effect is weakened when there is demand-pull inflation.

                                   11.    Demonstrate and explain how a decrease in aggregate demand can cause a recession without a drop in the price level.

                                   12.    Demonstrate and explain the effects of shifts in aggregate supply on the equilibrium price level and real GDP.

                                   13.    Explain how an economy can maintain full employment and stable prices under conditions of rising aggregate demand.

                                   14.    Explain how the impact of oil price fluctuations has changed for the U.S. economy over the past three decades.

(Test 4)

Chapter 13  Fiscal Policy, Deficits, and Debt

                                    1.    Define and explain the role of the Council of Economic Advisors.

                                    2.    Distinguish between discretionary and nondiscretionary fiscal policy.

                                    3.    Distinguish between expansionary and contractionary fiscal policy.

                                    4.    Recognize the conditions for recommending an expansionary or contractionary fiscal policy.

                                    5.    Explain expansionary fiscal policy and its effects on the economy and Federal budget.

                                    6.    Explain contractionary fiscal policy and its effects on the economy and Federal budget.

                                    7.    Give two examples of how built‑in stabilizers help alleviate recession or inflation.

                                    8.    Explain the differential impacts of progressive, proportional, and regressive taxes in terms of stabilization policy.

                                    9.    Explain the significance of the “standardized budget” concept.

                                   10.    Describe recent U.S. fiscal policy actions and the motivation behind them.

                                   11.    List three timing problems encountered with fiscal policy.

                                   12.    State political problems that limit effective fiscal policy.

                                   13.    Identify actions by households, and by state and local governments that can act against fiscal policy and make it less effective.

                                   14.    Differentiate between government deficits and the public debt.

                                   15.    State the relative size of the debt as a percentage of U.S. GDP and describe how that has changed in recent years.

                                   16.    Describe the annual interest charges on the debt, who holds the debt, and the impact of inflation on the debt.

                                   17.    Explain why the debt can also be considered public credit.

                                   18.    Identify and discuss two widely held myths about the public debt.

                                   19.    Explain the real or potential effect of the debt on income distribution, economic incentives, fiscal policy, and private investment

                                   20.    Explain and recognize graphically how crowding out is a concern caused by a large public debt.

                                   21.    Explain the purpose and structure of the Leading Economic Indicators.

(Test 5 & Final Exam)


This course is a Liberal Studies course.  The learning goals of the Liberal Studies Program are for students to:

       Demonstrate the ability to locate, analyze, synthesize, and evaluate information;

       Demonstrate the ability to interpret and use numerical, written, oral and visual data;

       Demonstrate the ability to read with comprehension, and to write and speak clearly, coherently, and effectively as well as to adapt modes of communication appropriate to an audience;

       Demonstrate the ability to critically analyze arguments; demonstrate the ability to recognize behaviors and define choices that affect lifelong well-being;

       Demonstrate an understanding of

       Past human experiences and ability to relate them to the present:

       Different contemporary cultures and their interrelationships;

       Issues involving social institutions, interpersonal and group dynamics, human development and behavior, and cultural diversity; scientific concepts and methods as well as contemporary issues in science and technology;

       Cultural heritage through its expressions of wisdom, literature and art and their roles in the process of self and social understanding.


This course is a Perspectives course.  The primary goals of the Perspectives courses are:

       To promote love of learning and to cultivate an active interest in the Liberal Studies;

       To build on the Core's foundation through practice and refinement of areas of academic emphasis;

       To provide students with a broadened world view and knowledge base;

       To provide experiences in the arts, humanities, and social sciences from which connections between disciplines can be revealed;

       To provide an introduction to the challenges of living in a global society;

       To create opportunities for reflection on values, and for discussing differences in values in a critical yet tolerant manner;

       To afford opportunities to make career or disciplinary choices.


In addition, each Perspectives course will be expected to include emphasis on one or more of the following:

       Critical analysis of arguments

       Oral communication

       Service learning

       Moral reflection

       Cultural diversity

       Any other creative but defensible area of intellectual development that a discipline wants to focus on, and that the program chooses to adopt.


          This course partly satisfies the P1 Social Science Perspective Requirement of the WCU Liberal Studies Program. Courses in Social Sciences provide systematic study of observational and analytic methods and findings of those disciplines that focus on the interpersonal functioning and institutional creations of human beings.  Courses in this category may focus on the scientific study of the mental and behavioral characteristics of individuals or groups or may focus on the description and explanation of political, economic, or legal institutions.  Included will be inquiry into basic social scientific concepts such as mind, behavior, class, society, culture, freedom, government, property, equality, and rights.

          As a component of the foundations of business knowledge, economics contributes an understanding of how and why individuals, as consumers and as managers of private and public sector organizations, make choices about the allocation of scarce resources. Economics examines how competition in markets leads to efficient production of goods and services, and the consequences of government intervention in private markets. Students gain an understanding of effective decision-making by managers of firms and other organizations. 

          Your education in economics thus prepares you for employment in a wide variety of jobs, or serves as an excellent foundation from which to pursue law school or other advanced degree work. Employment for economics majors ranges from very technically-oriented work, including business analysis and forecasting, with private firms, foundations or trade associations, to policy-oriented work with public sector agencies or private firms.  Economists work as loan officers at banks, budget analysts and market research analysts in firms, insurance actuaries, policy analysts for government agencies and industry groups, and in many other specialties where technical knowledge about consumer behavior, firm behavior, and policy implications is called for. 

          Virtually every large corporation in America, and numerous medium-sized firms, employs economists to help make appropriate pricing decisions for its products, to help evaluate the impact of government regulations, and to forecast future demand and supply conditions within the industry.  Trade organizations representing all firms in an industry hire economists for the same reasons.  Public sector agencies at the federal, state and local levels hire economists to monitor performance of the economy, to assess the desirability and impact of regulations, and to contribute to ongoing discussions of policy formation. Nonprofit groups such as hospitals, community foundations, charitable organizations and schools employ economists as well.


3.  Suggested Study Strategy

Spend no less than fifteen-twenty minutes each weeknight reviewing, recopying, and reorganizing your notes, in addition to reading the assigned chapters of McConnell.  This adds up to about 5-8 hours of study time each month.  Be committed to spending enough time each day to cover the material you need to, and to fully reviewing your notes and identifying areas requiring further work and things you need to ask me about.  Spread out this way, your study time will be much more productive than an equivalent amount of cramming before tests.   In addition to taking lecture notes in class, read, outline, and make notes on each text chapter.  Take the chapter quizzes posted on the course website to test your understanding and identify problem areas which need further work.  Some students find it helpful to attempt these quizzes before reading the chapter or before covering the material in class.  Take all the applicable chapter quizzes to prepare for exams.  The more time you have spent on the course, the easier it will be to spend additional time studying, and the more productive additional study time will be for you.  Start this strategy the first day of class, because the sooner you start, the easier it will be to continue.



4. Course Policies & Organization

"Eighty percent of success is just showing up." - Woody Allen


a. Absence policy:

Class attendance is essential.  Attendance is important because: 

     1. Responsible adults display responsible behavior, and 

     2. Difficult concepts will be explained and administrative announcements will be made in class. 


"Be content with fruit, with flowers, with weeds, with thorns even, but gather them in the one garden you may call your own."

- Edmond Rostand, Cyrano de Bergerac


b. Grades:  Out of a total of 1600 possible points:

Test 1

100 points

Test 2

200 points

Test 3

300 points

Test 4

400 points

Test 5/Final Exam

500 points

E-Writing Assignment

100 points


1600 points

you will receive the following letter grade:

Letter Grade

Minimum Required Percentage




























"Champions keep playing until they get it right." - Billie Jean King


c. Exams:

     1. No make ups. 

     2. Cheating will result in an automatic grade of F for the course. 

     4. There will be five cumulative exams.  Exam 5 will be administered during the last week of class and may be taken in place of the final. A final exam will be given during the scheduled final exam period. You may take either or both. If you take both, only the highest score will count. If you do better on test 2 than test 1, your test 2 grade will count for both tests 1 and 2. 

     5.  If you do better on test 3 than test 1 or test 2, your test 3 grade will replace each of the earlier test grades it is higher than, etc. 

     6. Tests 1 - 4 each consist of 32 questions each, but are graded on a basis of 30 questions.  The extra two are for extra credit. 

     7. Test 5 consists of 35 questions.  Because there is no quiz after this test, there are five extra credit questions.

     8. The final exam consists of 70 questions.  Ten are extra credit. 

     9. Always bring a calculator on test days.  You will not be permitted to take any exams without a calculator.


d. Withdrawal from the course:

     1. Students considering withdrawal prior to the withdrawal deadline should make an appointment to discuss withdrawal with the instructor. This is to give me the opportunity to advise you of your options and standing in the class. I do not attempt to stop students from withdrawing. 

     2. Ws will not be given after the appropriate deadline except for documented medical or legal reasons. See the WCU Undergraduate Catalog.

     3. Every semester a number of students receive Fs because they stop attending class and taking exams, but do not formally withdraw through the registrar. Please don't let this happen to you.


5. Writing assignment:

Your graded writing assignment is to create a resume-like homepage on the professional networking website LinkedIn (  Register for a free, non-premium account.  At a minimum, list Western Carolina University as your school, from the year you enrolled, to the future year you expect to graduate.  Any other information is optional, but everything you include in your personal profile must be (a.) honest and factually correct, and (b.) presented in a mature, professional manner.  You may include information on past and current employment, extra-curricular activities, etc.  If you post a picture, it must present a professional appearance.   When you are done and ready for your profile to be graded, invite me to add you as a contact.  My email address is  This assignment is due on Friday, January 29, but you are welcome to complete it earlier.


6.  Course calendar:

Read assigned chapters before the day they will be discussed in class.