Part I: Fundamentals of Macroeconomics



1. Measuring Economic Performance

Output, income, spending, money, interest, prices, saving and investment. Measuring GNP/GDP through production, income and spending.



2. Monitoring the Economy

Inflation and employment, Measuring inflation (price indexes, deflators), Measuring employment, unemployment and wages. (Okun’s Law, hour’s per week productivity).



3. Spending Balance

Consumption and income: income identity, consumption function, graphs, slopes and intercepts, algebra and coefficients. Does a tax cut pay for a relief? How spending balance is maintained, the multipliers Spending balance with foreign trade: exports and imports, The decline of the multiplier.



4. Financial Markets and Aggregate Demand

Investment and the interest rate: investment demand function, portfolio investment and Macro investment Next exports and interest rate. The demand for money and money supply. The IS-LM model: algebra, slopes, derivation of IS and LM curve: Monetary Policy, Fiscal Policy, the relative effectiveness, IS-LM in the business.



5. The Aggregate Demand-aggregate Supply Model

Aggregate supply and price adjustment, Aggregate supply: labour, capital, technology and potential GNP. Price stickiness and the determination of output in the short price adjustment, relative price setting and imperfect information, what determines expected inflation? Combining aggregate demand and price adjustment expanded models, graphs, algebraic derivation.



6. Macroeconomic Policy

Shocks and disturbances to the economy: (Shocks to aggregate demand, and price level, e.g. oil price shocks). Macroeconomic policy as a rule.



Part II: The Micro Foundations of Aggregate Demand



7. The Foreign Trade balance and the Exchange Rate

Economic policy in an open economy: algebraic derivation of the open economy IS curve, effects of MP and FP, the budget deficit and the trade deficit, The exchange rate and the price level. Macroeconomic effects of protectionism.

8. Government Budget Deficit and Aggregate Demand

Federal, state and local government budget. Fluctuations in the deficit, purchases, transfers and taxes. The monetary system: The demand for money, currency and checking deposits. Velocity and money demand.



Part III: The Micro Foundations of Aggregate Supply and Price Adjustment



9. Aggregate Supply and Economic Growth

Labour and capital markets, employment with flexible wages and prices: Policies to stimulate growth Long run output growth and inflation



10.New Classical Theory

Real business cycle theories. Imperfect information (Lucas Supply Curve), The theory of wage and price rigidities. Wage determination, Price determination, Policy implications: disinflation and the Real Effects of monetary policy