Intermediate Macroeconomics

Monday, Wednesday & Friday, 9:00 – 9:50 am, Bidgood 365

Instructor: Piyali Banerjee

Office: 341 Bidgood Hall

Office Hours: Monday and Wednesday, 10:00-11:00 AM, or by appointment


Required Texts:

Mankiw, N. Gregory, 2016, Macroeconomics, 9th edition (or earlier edition), Worth Publishers. (ISBN: 1-4641-8289-2)

Lecture Notes, References:

  • Copies of lecture notes will be available at Blackboard.
  • Reference materials will be updated on Blackboard.

Course Description: This course examines the determination of income, employment, the price level, interest rates and exchange rates in the economy.  Piece-by-piece, we construct a theoretical model that describes how each of these variables is determined in both the long- and short-run.  After the model is completed, we investigate issues of business cycle theory, foreign trade and macroeconomic policy. Special attention will be paid to current developments in these issues.  We will also work on advanced macro models.

Course Objective: At the completion of this course, students will be able to:

  • Calculate aggregate output, the inflation rate and the unemployment rate, and explain why they fluctuate.
  • Explain how fiscal policy affects output.
  • Analyze how the interest rate is determined and how monetary policy affects the interest rate.
  • Use the aggregate demand and aggregate supply to characterize the equilibrium output in the short run and in the medium run.
  • Show the dynamic effects of monetary and fiscal polices.
  • Demonstrate the role of expectations in consumption, investment, and financial markets.
  • Understand the real exchange rate and analyze the implications of openness in goods markets and financial markets.

Exams: There will be three midterm exams given during the semester and a final exam. Each exam will consist one multiple choice section and a free response/short answer section. The final exam is optional and cumulative.

The exam questions involve diagrams and/or equations emphasizing material covered in the lectures.  The midterm exams cover new material only.

Calculators may be used on exams but may not be shared.  All exams are closed book and no notes allowed.

To succeed on the exams, you will need to understand the course materials very well.

Exam Dates:

Exam Date

Midterm 1 Friday, Sept. 28, 2018 (9 am, BD 365)

Midterm 2 Monday, Oct. 29, 2018 (9 am, BD 365)

Midterm 3 Friday, Nov. 30, 2018 (9 am, BD 365)

Final Monday, Dec. 10, 2018 (8:00 – 10:30 am, BD 365)

In-class Exercises: There will be graded in-class exercise from time to time. Students are encouraged to work in groups for in-class. Students can make up for missing in-class exercises within 7 days.

Homework Assignments: After finishing each chapter, homework will be uploaded in the Blackboard. The solution of homework assignments will be uploaded time to time in the blackboard. Once the solution is uploaded, that homework will not be accepted.

Recommended end-of-chapter problems will be discussed in class as time permits.

Grading Policy: Your final grade is determined by your performance on the in-class exercises, homework assignments, midterm exams, final exam and class attendance.

Points will be deducted for absences (more than 2 absences) and grades can be lowered significantly for more than 2 full letter grades (for example, B to D, A to C) for excessive absences (more than 6 absences). For instance, if total class count is 20, then if you have 2 absences, I will not deduct any point. If your total absence is 6, then you will get 16 out of 20 for attendance.

The weights attached to each are shown below:

Description   Points

Three Midterm exams 300 points

Final Exam 150 points

In-class exercises about  60  points

Homework assignments about 120 points

Class attendance and participation   20  points


Total 470 points

A+    97 – 100

B+    87 – 89

C+    77 – 79

D+   67 – 69

A      93 – 96

B       83 – 86

C      73 – 76

D     63 – 66

A-     90 – 92

B-      80 – 82 C-    70 – 72

D-    60 – 62


Policy on Missed Exams, Homework and In-class Assignments: Students are forewarned well in advance of the exam dates and should schedule your time accordingly and decide for other potential conflicts. If you will miss a midterm exam for a university sanctioned reason, you must contact me before the start of the missed midterm exam with written documentation for the absence (and contact information for the person issuing the excuse). If the absence is approved, then you will be given the makeup exam. If you miss a midterm exam without my prior approval, you will receive a score of zero at that exam.

Students can make up for homework and in-class assignments within 7 days during my office hours. Else, you will receive zero at that respective assignment(s).

Course Requirements: Prerequisites: EC 110 and EC 111 with a minimum grade of C-minus for each.

I require two things of you.  First, you must attend class.  Attendance is important for your individual success in the course. Second, you must prepare for class by reading the assigned readings beforehand.  The assigned readings are the Mankiw text, and excerpts from articles (which will be provided).  If one commits himself or herself to such a routine, then this course will prove both emotionally manageable and intellectually rewarding.

Students are expected to read the required readings in the textbook prior to the lecture.

Things to do:  For each chapter, we will do:

  • Lecture in class
  • In-class exercises
  • Homework assignments
  • Applications to Curent Issues

Course Expectations:  It is expected that all readings will be complete by the start of class and that you come to class ready to participate.


Class Participation:  Attendance and class participation are encouraged in order to have a successful experience in this course. I cannot offer a make-up exam without a valid excused absence.


Class Conduct: The classroom is a formal space and a place for mutual respect.  I pledge to do everything I can to make the classroom environment a conducive place for learning.  I expect that students will do the same.  To maintain this formal atmosphere, please refrain from the following activities during class: texting or talking on the phone, chewing, eating a large quantity of food, or distracting other students from completing in-class work.


Class Schedule Conflicts: If you are involved in an extra-curricular activity such as sports or choir that might have a time conflict with the class, please let me know about this as soon as possible.  If an exam occurs on that day, accommodations can be made.


Other Information:

  1. Academic Conduct and Etiquette:All acts of dishonesty in any work constitute academic misconduct.  Cell phones must be turned off during class time.  Do not leave the room during the class without permission.

Having or using any materials that are not explicitly authorized by the instructor is not permitted.  For example, test banks and other materials developed and made available for instructors are not permissible for use regardless of where they were obtained.  If you are not sure if something is permissible, check with the instructor.

  1. Cheating will not be tolerated.   All violations will result in an F for the course and will be strictly enforced according to the terms of The University of Alabama Academic Honor Code.  Signing attendance for another student is considered academic misconduct.


  1. UAct: The University of Alabama is committed to an ethical, inclusive community defined by respect and civility.  The UAct website ( provides extensive information on how to report or obtain assistance with a variety of issues, including issues related to dating violence, domestic violence, stalking, sexual assault, sexual violence or other Title IX violations, illegal discrimination, harassment, child abuse or neglect, hazing, threat assessment, retaliation, and ethical violations or fraud.


  1. Disability Access Statement:To request disability accommodations, contact Disabilities Services (348-4285).  After initial arrangements are made with Disabilities Services, contact course instructor.


  1. Severe Weather Protocol:In case of a severe weather event, this course will observe the university’s policies with respect to cancellations. This applies to both the regular class period and to lab sessions. You are urged to participate in the university’s notification system to learn when these events have affected university operations.
  1. Pregnant Student Accommodations:Title IX is a federal law that prohibits discrimination on the basis of sex in an education program. Among the types of gender discrimination covered by this statute, Title IX protects against discrimination related to pregnancy or parental status. Protection extends to students who are pregnant or who have either had a false pregnancy, termination of pregnancy, have gone through childbirth, or are recovering from any of those conditions. Title IX regulations also prohibit a school from applying any rule related to a student’s parental, family or marital status that treats students differently based on their sex.  If you are pregnant and will need accommodations for this class, please review the University’s FAQs on the UAct website.


  1. Religious Observances:The University of Alabama respects the religious diversity of our academic community and recognizes the importance of religious holy days and observances in the lives of our community members. UA strives to be an inclusive community in all aspects of academic and campus life. Students who will miss classes for sincerely held religious practices and observances, will be accommodated unless the accommodation would create an undue hardship on the University. For details, visit

Course Outline:

Topics Readings

Part I.  Introduction

1. The Sciences of Macroeconomics Mankiw, Ch. 1
2. The Data of Macroeconomics Mankiw, Ch. 2
Part II.  Classical Theory: The Economy in the Long-run
3. National Income Mankiw, Ch. 3
Midterm 1
4. Money and monetary System Mankiw, Ch. 4
5. Inflation Mankiw, Ch. 5
6. The Open Economy Mankiw, Ch. 6
7. Unemployment Mankiw, Ch. 7
Midterm 2
Part III.  Business Cycle Theory: The Economy in the Short-run
8. Introduction to Economic Fluctuations Mankiw, Ch. 10
9. Aggregate Demand (AD) I Mankiw, Ch. 11
10. Aggregate Demand (AD) II Mankiw, Ch. 12
Midterm 3
11. AD in the Open Economy Mankiw, Ch. 13
12. Aggregate Supply* Mankiw, Ch. 14
Final Exam
* This topic and others will be covered if time permits.


Piyali Banerjee