Principles of Macroeconomics

This version:

Course Description

An introductory course covering issues relating to the economy as a whole.

Topics discussed include, but are not limited to, the study of national income and the Gross Domestic Product (GDP), national income determination, investment, consumption and consumption theories; classical economic theories, Keynesianism, monetarism, rational expectations, supply-side economics; the business cycle, inflation, unemployment; money and the money supply, the banking system, monetary and fiscal policy, budget deficits and the national debt.

Course Objectives

The course will enable students to gain an understanding of how the market economy works and how economic theory can be used to understand issues of public policy and public finance.

Course Materials


The course will follow the textbook: Cowen & Tabarrok, 2015, Modern Principles of Economics, 3rd edition, Worth Publishers.
Available from bookdepository and amazon

Further recommendations:

Additionally, material from the following text may be used:
Goodwin et. al., 2014, Principles of Economics in Context, Routledge.
Available from amazon and bookdepository.
Relevant chapters are listed below as [PEC:Chapter number].

The Cartoon Introduction to Economics: Volume Two: Macroeconomics by Grady Klein / Yoram Bauman, Macmillan

To prepare for the exams, Schaum’s Outlines of Principles of Economics offers a huge number of fully solved problems.
Available from amazon or bookdepository

Course Requirements:

Students must read the corresponding chapters of the textbook before each session. Reading the economic and political press will also be helpful.

I recommend that you try to solve the end of chapter problems in preparation and review of each class session.

Class meets each Monday and Thursday at 16:50 till 18:05. Please bring a hard copy of the problems we want to discuss (see below) to each class.

Laptops are banned from use during class sessions. See Mueller, Pam A., and Daniel M. Oppenheimer. “The pen is mightier than the keyboard: Advantages of longhand over laptop note taking.” Psychological science 25, no. 6 (2014): 1159-1168 and Ravizza, Susan M., Mitchell G. Uitvlugt, and Kimberly M. Fenn. “Logged in and zoned out: How laptop internet use relates to classroom learning.” Psychological science 28, no. 2 (2017): 171-180 for the reasons.

Instructor Information:

Prof. Dr. Dennis A. V. Dittrich

My office hours are 24 hours a day via email. For meetings in my office appointments can be arranged through the my webpage at:

Updated information, links to the literature, additional materials, etc. can be found on my webpage as well.

Grading Guidelines:

Grading ComponentWeight
Midterm Exam 130%
Midterm Exam 230%
Final Examination40%

If the final exam is better than one or both of the midterm exams the corresponding midterm exam grade(s) will be replaced by the grade of the final exam.


A typical 3 credit course requires 150 hours of your time. The table below identifies how I expect those 150 hours will be allocated. While you do not receive direct marks for reading, reading will affect your class participation mark (your ability to participate in class discussions and activities) and your final exam mark.

Class Time (3 hours / week)45 hours
Reading (3 hours / week)45 hours
Preparation and Review (4 hours / week)60 hours

Topics and Reading Assignments

Session 1 (04.09.)

Economics: The Big Ideas (Ch. 1, PEC: 1)

Session 2 (07.09.)

GDP (Ch. 26, PEC: 0, 1, 19, 20, 21)

The New Yorker, September 9, 2015, The End of GDP?
The Economist, April 30, 2016, The trouble with GDP
The Economist, April 30, 2016, How to measure prosperity

Session 3 (11.09.)


Session 4 (14.09.)

Growth (Ch. 27 & 28, PEC: 20, 32)

Session 5 (18.09.)


In “Comparative Economic Systems” we will discuss economic performance and institutions in more detail.

Session 6 (25.09.)

Growth and
Saving, Investment, & the Financial System (Ch. 29, PEC: 30, 26)

Session 7 (28.09.)

Saving, Investment, & the Financial System

In “Principles of Finance” we will discuss these topics in more detail.

Session 8 (02.10.)

Unemployment (Ch. 30, PEC: 23)

Session 9 (16.10.)


Session 10 (19.10.)

Midterm Exam 1

Session 11 (23.10.)

Session 12 (26.10.)

Money and Inflation (Ch. 31 & 34, PEC: 27)

Stone Money

NPR, 2011, The island of stone money: Yap
Friedman, M., 1991. The island of stone money. Hoover Institution, Stanford University.

Session 13 (30.10.)


Session 14 (02.11.)

Business Fluctuations (Ch. 32 & 33, PEC: 24)

Session 15 (06.11.)

Business Fluctuations

Session 16 (09.11.)

The Central Bank & Monetary Policy (Ch. 34 & 35, PEC: 27, 28)

The Economist, 20th February 2016, Unfamiliar ways forward
The Economist, 20th February 2016, Out of ammo?

Session 17 (13.11.)

Monetary Policy

Session 18 (16.11.)

Monetary Policy

Session 19 (20.11.)

Midterm Exam 2

Session 20 (27.11.)

Taxes & Government Spending (Ch. 36, PEC: 25, 31)

Session 21 (30.11.)

Taxes & Government Spending

In “Public Finance” we will discuss Taxes in more detail.

Session 22 (04.12.)

Fiscal Policy (Ch. 37, PEC: 25, 28)

The Economist, 20th February 2016, Unfamiliar ways forward
The Economist, 20th February 2016, Out of ammo?

Session 23 (07.12.)

Fiscal Policy

Session 24 (11.12.)

Political Economy & Public Choice (Ch. 20)

Session 25 (14.12.)

Political Economy & Public Choice (Ch. 20)

Session 26 (18.12.)

Economics, Ethics, & Public Policy (Ch. 21)

In “Public Finance” we will discuss the role of Government in the Economy, Taxes, Public Choice, and Public Policy in more detail.

Session 27 (04.01.)


Session 28 (08.01.)


Topics and reading assignments are subject to changes.

Problem sets

We will discuss problems – mostly taken from our textbook – in class. You will find the problems for download in a dropbox folder: here.

If you do not have a Dropbox account yet: Get one for free!