ECO406
Business Cycles & Growth
Topics include analysis of economic fluctuations and their impact on
corporations and consumers; different explanations for business cycles;
monetary and fiscal policy for stabilizing economic fluctuations; effects
of public debt, investment, employment and trade policy on economic
growth.
ECO406: Business Cycles & Growth
Online
Table of Contents
COURSE AT A GLANCE ...................................................................................................................................................................... 4
COURSE DESCRIPTION ............................................................................................................................................................................ 4
COURSE DESIGN ..................................................................................................................................................................................... 4
COURSE PREREQUISITES......................................................................................................................................................................... 5
LEARNING OUTCOMES ........................................................................................................................................................................... 5
LEARNING RESOURCES .......................................................................................................................................................................... 5
Required Text .................................................................................................................................................................................... 5
Required Articles ............................................................................................................................................................................... 5
Required Websites ............................................................................................................................................................................. 6
COMPONENTS OF COURSE EVALUATION ................................................................................................................................... 7
DISCUSSIONS .......................................................................................................................................................................................... 7
ASSIGNMENTS ........................................................................................................................................................................................ 7
Written Assignments .......................................................................................................................................................................... 7
FINAL PAPER .......................................................................................................................................................................................... 7
COURSE GRADING .................................................................................................................................................................................. 9
Course Grading Breakdown.............................................................................................................................................................. 9
Grading Percent Breakdown............................................................................................................................................................. 9
WEEK ONE ........................................................................................................................................................................................... 10
COURSE CONTENT ................................................................................................................................................................................ 10
Overview ......................................................................................................................................................................................... 10
Learning Outcomes ......................................................................................................................................................................... 10
Required Readings .......................................................................................................................................................................... 10
Recommended Reading ................................................................................................................................................................... 11
Required Website ............................................................................................................................................................................ 11
Discussions...................................................................................................................................................................................... 11
Assignments ..................................................................................................................................................................................... 11
WEEK TWO .......................................................................................................................................................................................... 12
COURSE CONTENT ................................................................................................................................................................................ 12
Overview ......................................................................................................................................................................................... 12
Learning Outcomes ......................................................................................................................................................................... 12
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ECO406: Business Cycles & Growth
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Required Readings .......................................................................................................................................................................... 13
Recommended Reading ................................................................................................................................................................... 13
Discussions...................................................................................................................................................................................... 13
Assignments ..................................................................................................................................................................................... 13
WEEK THREE ...................................................................................................................................................................................... 15
COURSE CONTENT ................................................................................................................................................................................ 15
Overview ......................................................................................................................................................................................... 15
Learning Outcomes ......................................................................................................................................................................... 15
Required Readings .......................................................................................................................................................................... 15
Discussions...................................................................................................................................................................................... 15
Assignments ..................................................................................................................................................................................... 16
WEEK FOUR ......................................................................................................................................................................................... 17
COURSE CONTENT ................................................................................................................................................................................ 17
Overview ......................................................................................................................................................................................... 17
Learning Outcomes ......................................................................................................................................................................... 17
Required Readings .......................................................................................................................................................................... 17
Recommended Website .................................................................................................................................................................... 17
Discussions...................................................................................................................................................................................... 17
WEEK FIVE .......................................................................................................................................................................................... 19
COURSE CONTENT ................................................................................................................................................................................ 19
Overview ......................................................................................................................................................................................... 19
Learning Outcomes ......................................................................................................................................................................... 19
Required Readings .......................................................................................................................................................................... 19
Recommended Reading ................................................................................................................................................................... 19
Discussions...................................................................................................................................................................................... 20
Assignments ..................................................................................................................................................................................... 20
COURSE MAP ....................................................................................................................................................................................... 21
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ECO406: Business Cycles & Growth
Online
Course at a Glance
Course Description
Topics include analysis of economic fluctuations and their impact on corporations and consumers; different explanations
for business cycles; monetary and fiscal policy for stabilizing economic fluctuations; effects of public debt, investment,
employment and trade policy on economic growth.
Course Design
This course has been designed for the individual student. That does not mean that students cannot collaborate and work on
assignments as teams or groups. Indeed, collaborative efforts should raise the level of learning synergy as one student’s
instructional efforts reinforce that individuals learning experience. However, the final measure of learning will be
conducted on an individual basis and by the performance of that individual in addressing classroom activity, course
assignments, and the Final Paper. The Final Paper should demonstrate understanding of the readings as well as the
implications of new knowledge.
The learning experience will consist of the following efforts: reading of the text and articles that may be assigned,
discussion of text material and article content, a weekly written assignment, and a Final Paper. The Final Paper should
demonstrate understanding of the readings as well as the implications of new knowledge.
Reading the text will be the primary source of formal knowledge for each student. A student will be expected to read each
chapter as sequenced through the course. In doing so that student will be measured on how well the subject matter is
understood, how adept that student is at recognizing situations in which the subject matter is at hand, translating the
recognition into a useful application of the knowledge, and use the knowledge application to solve a problem or find a
solution. The student will also be expected to defend the chosen approach towards problem solving by referencing text
and classroom materials and to defend the rejection of alternatives that may have warranted consideration.
Homework assignments will be the routine measuring of a student’s ability to apply specific learned knowledge to a
formal and structure situation with the end result being an answer that is measurable in a quantitative manner. Each
assignment will have the objective of testing the student on the composite knowledge presented in the respective chapter.
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ECO406: Business Cycles & Growth
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It is expected that this routine will instill a sense of process discipline in each student that will guide the problem solving
process.
Course Prerequisites
There are no prerequisites for ECO406.
Learning Outcomes
Upon successful completion of this course, students will be able to:
1. Evaluate the economic forces underlying the US postwar business cycles.
2. Examine supply shocks and their influence on business cycles.
3. Analyze alternative models of business cycle fluctuations and to compare and contrast the government policy
recommendations and responses to past cycles.
4. Assess basic economic indices.
5. Assess contagion or multiple shock effects in an economic system due to government intervention.
Learning Resources
Required Text
Knoop, T.A. (2008). Modern Financial Macroeconomics: Panics, Crashes, and Crises. Malden, MA: Blackwell
Publishing. ISBN: 9781405161817
Required Articles
Hakkio, C., & Keeton, W. (2009). Financial stress: What is it, how can it be measured, and why does it matter? Economic
Review - Federal Reserve Bank of Kansas City, 94(2), 5-50. Retrieved from ABI/INFORM Global.
Merkl, C. (2008). Galí J: Monetary policy, inflation, and the business cycle: An introduction to the new Keynesian
framework: XI, 203pp., Princeton University Press, Journal of Economics, 95(2), 179-181. Retrieved from
ABI/INFORM Global.
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ECO406: Business Cycles & Growth
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Patton, M. (2014, February 11). Why the next financial crisis could be worse than 2008. Forbes. Retrieved from
http://www.forbes.com/sites/mikepatton/2014/02/11/why-the-next-financial-crisis-could-be-worse-than-2008/
Stiglitz, J. (2009). The global crisis, social protection and jobs. International Labour Review, 148(1/2), 1-13. Retrieved
from ABI/INFORM Global.
Required Websites
Gelber, D., & Bach, J. (2008, December 14). The mortgage meltdown [video]. Retrieved from
http://www.cbs.com/primetime/60_minutes/video/index.php?pid=xX_w4fe5L8vlPItBL4oMI9zp_3o6tHR7
Schuster, H. (Producer). (2009, June 7). Ben Bernanke: What caused the financial crisis? [video]. Retrieved from
http://moneywatch.bnet.com/economic-news/video/ben-bernanke-what-caused-the-financial-crisis/309586/
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Components of Course Evaluation
Multiple measures of evaluation are used in the course, allowing students opportunities to demonstrate their learning in
more than one way, and giving consideration to individual learning styles. Course components that will be evaluated
include:
Discussions
Each week students will participate in online discussions with classmates, which are related to the week’s readings. These
discussions replace the interactive dialogue that occurs in the traditional classroom setting. Each week, students’ initial
discussion posts are due by 11:59 p.m. (of the time zone in which each student resides) on Day 3 (Thursday). Students
will have until 11:59 p.m. on Day 7 (the following Monday) to make the required minimum number of response posts to
classmates. Discussions represent 40% of the overall course grade.
Assignments
Written Assignments
There is a written assignment due in Weeks One through Three of this course. These assignments must reflect collegelevel writing and critical thinking. Assignments represent 30% of the overall course grade.
Final Paper
The final assignment for this course is a Final Paper. The purpose of the Final Paper is for you to culminate the learning
achieved in the course by describing your understanding and application of knowledge in the field of business cycles
through the analysis of a financial case. The Final Project represents 30% of the overall course grade.
Focus of the Final Paper
Finance The financial sector has a profound influence on important macroeconomic variables like GDP growth,
employment and inflation. The evolution of financial institutions has made the world’s economies more interconnected
than ever, allowing financial “contagion” to spread out of control. In an eight- to ten-page paper (not including title and
references pages), address the following:
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ECO406: Business Cycles & Growth
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• Describe recent financial crises and describe the effect that destabilized credit, mortgage, derivative, and
insurance markets have had on national economies and assess the stabilization policies implemented to address
them.
•
Compare and contrast two different countries during a time period when they experienced financial crises.
•
Explain the role and action that central banks took to stabilizing the business cycle. Be sure your answer includes
appropriate data, graphs, terms, macroeconomic indicators and theories used.
•
Indicate which country you believe implemented the best stabilization policy during the crises, supporting your
selection with scholarly resources.
Writing the Final Paper
The Final Paper:
1. Must be eight to ten double-spaced pages in length, and formatted according to APA style as outlined in the
Ashford Writing Center.
2. Must include a title page with the following:
a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted
3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must use at least four scholarly sources, not including the text
7. Must document all sources in APA style, as outlined in the Ashford Writing Center.
8. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing
Center.
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ECO406: Business Cycles & Growth
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Course Grading
Course Grading Breakdown
Letter
Grade
A
AB+
B
BC+
C
CD+
D
D-
Percent
0.933
0.900
0.866
0.833
0.800
0.766
0.733
0.700
0.666
0.633
0.600
=
Lower Level
of Grade
93
90
86
83
80
76
73
70
66
63
60
Grading Percent Breakdown
Discussions
Assignments
Final Paper
Total:
9
40%
30%
30%
100%
ECO406: Business Cycles & Growth
Online
Week One
Course Content
To be completed during the first week of class
Overview
Assignment
Post Your Introduction
Financial Institutions
Financial Crisis
Central Banks
Day 1
Discussion
Grading
Percent
1
Day 3
st
(1 post)
Day 3
st
(1 post)
Day 7
Discussion
3
Discussion
4
Assignment
10
Due Date
Format
Learning Outcomes
This week students will:
1. Examine the basics of financial markets and financial institutions.
2. Assess the impact of hedge funds on the U.S. economy.
3. Analyze the history of banking, financial markets, and central banking.
Required Readings
1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises:
a. Chapter 1: The Basics of Financial Markets and Financial Institutions
b. Chapter 2: A Brief History of Financial Development
2. Patton, M. (2014, February 11). Why the next financial crisis could be worse than 2008. Forbes. Retrieved from
http://www.forbes.com/sites/mikepatton/2014/02/11/why-the-next-financial-crisis-could-be-worse-than-2008/
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ECO406: Business Cycles & Growth
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Recommended Reading
1. Read the following ProQuest article: Hakkio, C., & Keeton, W. (2009). Financial stress: What is it, how can it be
measured, and why does it matter? Economic Review - Federal Reserve Bank of Kansas City, 94(2), 5-50.
Retrieved from ABI/INFORM Global. This article supports the text reading for the week.
Required Website
1. View the video, Ben Bernanke: What caused the financial crisis?. This video supports the Central Banks
assignment for the week.
Discussions
Participate in the following discussions:
1. 1st Posting Due by Day 1. Post Your Introduction. Post your introduction on the discussion forum titled,
“Introductions” found in Week One. Respond to at least three of your classmates’ postings.
2. 1st Posting Due by Day 3. Financial Institutions. What are the characteristics of a financial institution, and why
does it lead to economic development? Be sure your answer includes an example of a developing country and the
impact of financial institutions on their economic growth. Respond to at least two of your classmates’ postings.
3. 1st Posting Due by Day 3. Financial Crisis. Read Mike Patton’s article, “Why the Next Financial Crisis Could Be
Worse Than 2008.” Based on the information presented in the article, discuss the following:
a. What caused the 2007-2009 financial crisis?
b. What could possibly cause the next financial crisis?
c. Do you agree with the author? Why or why not?
Respond to at least two of your classmates’ posts.
Assignments
1. Due by Day 7. Central Banks. One important aspect of modern finance that separates it from past eras is the
pervasiveness and power of central banks. Central banks play a vital role in ensuring the stability and efficiency
of banking systems as well as influencing interest rates, bank lending, asset prices, inflation, output,
unemployment and other crucial aspects of macroeconomics.
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ECO406: Business Cycles & Growth
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In a two- to three-page paper (not including title and references pages), describe the current state of the U.S.
economy using the two monetary aggregates (M1 and M2) currently published by the Federal Reserve. In your
description, illustrate the trends of the two monetary aggregates. Evaluate what the Federal Reserve Bank is trying
to accomplish by implementing these policies to stabilize the business cycle. Support your work with at least two
scholarly resources in addition to the textbook.
You are required to format your paper according to APA style guidelines.
Week Two
Course Content
To be completed during the second week of class
Overview
Assignment
The Business Cycle
Economic Theory
Applying Theory to the U.S. Economy
Discussion
Grading
Percent
4
Discussion
4
Assignment
10
Due Date
Day 3
st
(1 post)
Day 3
st
(1 post)
Day 7
Format
Learning Outcomes
This week students will:
1. Evaluate the roles of business cycles and the financial indicators associated with them.
2. Analyze monetarist and classical macroeconomic theories and how they may affect the economy.
3. Compare and contrast the influences of Keynesian, Monetarist, and Neoclassical Theories in an economic system.
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ECO406: Business Cycles & Growth
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Required Readings
1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises:
a. Chapter 3: Business Cycles and Early Macroeconomic Theories of Finance
b. Chapter 4: Keynesian, Monetarist, and Neoclassical Theories
Recommended Reading
1. Read the following ProQuest article: Merkl, C. (2008). Galí J: Monetary policy, inflation, and the business cycle:
An introduction to the new Keynesian framework: XI, 203 pp., Princeton University Press, Journal of Economics,
95(2), 179-181. Retrieved from ABI/INFORM Global.
Discussions
Participate in the following discussions:
1. 1st Posting Due by Day 3. The Business Cycle. What part of the business cycle is the U.S. economy currently
in? Evaluate your answer by using three financial indicators. Analyze the trends and forecast the direction of the
business cycle in the next six months using your economic indicators. Respond to at least two of your classmates’
postings.
2. 1st Posting Due by Day 3. Economic Theory. Economists have always disputed about the appropriate action to
take to stimulate an economy out of a recession. Compare and contrast the recommendations for appropriate
action of the monetarist theory and the classical model. Be sure your response is stated in terms of the relevant
principles of both theories.
Assignments
1. Due by Day 7. Applying Theory to the U.S. Economy. In a two- to three-page paper (not including title and
references pages), evaluate the current state of the U.S. economy. Using your evaluation of the U.S. economy’s
current state, explain how a Keynesian, Monetarist, and Neoclassical Theorist would each propose promoting
economic growth. Discuss the cause and effect variables that each theory uses to explain business cycles. Support
your work with at least two scholarly resources in addition to the textbook.
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ECO406: Business Cycles & Growth
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You are required to format your paper according to APA style guidelines.
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ECO406: Business Cycles & Growth
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Week Three
Course Content
To be completed during the third week of class
Overview
Assignment
Role of Credit
Credit Rationing
Monetary Policy and Macroeconomy
Discussion
Grading
Percent
4
Discussion
4
Assignment
10
Due Date
Day 3
st
(1 post)
Day 3
st
(1 post)
Day 7
Format
Learning Outcomes
This week students will:
1. Evaluate the financial accelerator model and the role of credit in business cycles.
2. Analyze the effects of two models of credit rationing on economic growth.
3. Assess the contagion effects of monetary policy in the macroeconomy.
Required Readings
1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises:
a. Chapter 5: New Institutional Theories of Finance: Models of Risk and the costs of Credit
Intermediation
b. Chapter 6: New Institutional Theories of Finance: Models of Credit Rationing
Discussions
Participate in the following discussions:
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ECO406: Business Cycles & Growth
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1. 1st Posting Due by Day 3. Role of Credit. Analyze the role of credit in our economy and how it influences the
business cycle. In your answer, explain how the role of credit leads to the stability of our economy. Respond to at
least two of your classmates’ postings.
2. 1st Posting Due by Day 3. Credit Rationing. Analyze the role of credit rationing in both a developed country
and a less-developed country. How does the role of credit rationing influence economic growth and employment
in these two countries? Respond to at least two of your classmates’ postings.
Assignments
1. Due by Day 7. Monetary Policy and Macroeconomy. In a two- to three-page paper (not including title and
references pages), answer the question “How does monetary policy affect the macroeconomy?” In your answer,
include the following:
•
Explain the fundamentals behind why changes in the money supply have real effects on the economy and
the monetary transmission mechanism.
•
Explain how monetary policy can be used to effectively stabilize output and smooth business cycles.
•
Evaluate the role of monetary policy and how it affects the macroeconomy given the implications of the
financial accelerator.
Support your work with at least two scholarly resources in addition to the textbook. You are required to format
your paper according to APA style guidelines.
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ECO406: Business Cycles & Growth
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Week Four
Course Content
To be completed during the fourth week of class
Overview
Assignment
Effective Policy?
Stabilizing Asset Prices
Discussion
Grading
Percent
4
Discussion
4
Due Date
Day 3
st
(1 post)
Day 3
st
(1 post)
Format
Learning Outcomes
This week students will:
1. Evaluate the effectiveness of stabilization policy.
2. Analyze the causes and prevention of asset bubbles and banking crises.
Required Readings
1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises:
a. Chapter 7: The Role of Financial Systems in Monetary and Stabilization Policy
b. Chapter 8: Banking Crises and Asset Bubbles
Recommended Website
1. View the video: The mortgage meltdown. This video supports the text readings for the week.
Discussions
Participate in the following discussions:
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ECO406: Business Cycles & Growth
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1. 1st Posting Due by Day 3. Effective Policy? Evaluate the effectiveness of monetary policy during the 2008
recession in the United States. Does the role of monetary policy increase the volatility of growth in the monetary
base and Real GDP in the U.S? Respond to at least two of your classmates’ postings.
2. 1st Posting Due by Day 3. Stabilizing Asset Prices. Economists have been grappling with a debate regarding the
extent to which stabilizing asset prices should be a goal of monetary policy. The three goals of the Federal
Reserve Board are to have economic growth, full employment, and price stability. In your opinion, should
monetary policy be used to stabilize asset prices given the volatility of the market in the past couple of years?
Respond to at least two of your classmates’ postings.
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ECO406: Business Cycles & Growth
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Week Five
Course Content
To be completed during the fifth week of class
Overview
Assignment
Capital Flow and Currency Crises
Financial Deregulation
Final Paper
Discussion
Grading
Percent
4
Discussion
4
Assignment
30
Due Date
Day 3
st
(1 post)
Day 3
st
(1 post)
Day 7
Format
Learning Outcomes
This week students will:
1. Examine the causes of capital flight and currency crises.
2. Evaluate approaches to domestic financial regulation and deregulation and their effects on the economy.
3. Evaluate historical currency and banking crises in multiple countries.
Required Readings
1. Read the following chapters in Modern Financial Macroeconomics: Panics, Crashes, and Crises:
a. Chapter 9: Capital Flight and the Causes of International Financial Crises
b. Chapter 10: International Financial Crises: Policies and Prevention
c. Chapter 11: What We Have Learned, What We Still Need to Learn About Financial Macroeconomics
Recommended Reading
1. Read the following ProQuest article: Stiglitz, J. (2009). The global crisis, social protection and jobs. International
Labour Review, 148(1/2), 1-13. Retrieved from ABI/INFORM Global. This article supports the discussions for
the week.
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ECO406: Business Cycles & Growth
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Discussions
Participate in the following discussions:
1. 1st Posting Due by Day 3. Capital Flow and Currency Crises. One of the distinguishing features of currency
crises and capital flight episodes that have occurred since the 1980’s is that they have often linked across
countries. Do you believe a contagion effect of capital flow and currency crises can lead to greater volatility and
deep stabilization in markets? In your answer, include one example where this has occurred. Respond to at least
two of your classmates’ postings.
2. 1st Posting Due by Day 3. Financial Deregulation. The last two decades have taught us that when it comes to
financial deregulation, it is possible to have too much of a good thing too quickly. Financial deregulation has
often taken place indiscriminately without proper consideration of risks associated with the unfettered actions of
borrowers and lenders. Compare and contrast less government intervention in the financial market and more
intervention. Does deregulation lead to more economic growth and stability? Respond to at least two of your
classmates’ postings.
Assignments
1. Due by Day 7. Final Paper. The complete instructions for the Final Paper can be found in Week Five of your
online course or in the “Components of Course Evaluation” section of this guide.
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ECO406: Business Cycles & Growth
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Course Map
The course map illustrates the careful design of the course through which each learning objective is supported by one or
more specific learning activities in order to create integrity and pedagogical depth in the learning experience.
Learning Outcome
Week
Assignment
1. Evaluate the economic forces underlying the
1
Financial Institutions
US postwar business cycles.
1
Financial Crisis
1
Central Banks
3
Role of Credit
3
Credit Rationing
4
Effective Policy?
5
Capital Flow and Currency Crises
3
Monetary Policy and Macroeconomy
4
Stabilizing Asset Prices
5
Capital Flow and Currency Crises
5
Final Paper
3. Analyze alternative models of business cycle
2
The Business Cycle
fluctuations and to compare and contrast the
2
Economic Theory
government policy recommendations and
2
Applying Theory to the U.S. Economy
responses to past cycles.
3
Monetary Policy and Macroeconomy
4
Effective Policy?
4
Stabilizing Asset Prices
5
Financial Deregulation
5
Final Paper
1
Central Banks
2
The Business Cycle
3
Monetary Policy and Macroeconomy
5
Final Paper
2. Examine supply shocks and their influence on
business cycles.
4. Assess basic economic indices.
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ECO406: Business Cycles & Growth
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