Principles of Macroeconomics

What you'll learn

• Explain what macroeconomics studies, describe the business cycle and output gap, calculate and annualize growth rates, and distinguish positive from normative claims.
• Measure GDP using the production, income and expenditure approaches, distinguish nominal from real GDP, calculate the GDP deflator and GDP per capita, and evaluate what GDP leaves out.
• Construct a consumer price index, calculate inflation and real values, compare CPI, core CPI and PCE inflation measures used by the BLS and the Federal Reserve, and explain the costs of inflation and deflation.
• Calculate unemployment, participation and employment rates from Current Population Survey data, classify types of unemployment, apply Okun's law, and explain how unemployment insurance works.
• Apply compounding and the rule of 70, use growth accounting and the Solow model to explain long-run growth, and evaluate explanations for differences in productivity, including Canada's productivity gap.
• Use national saving identities and the loanable funds model to analyze interest rates and crowding out, apply the Fisher equation, and describe the roles of financial intermediaries.
• Explain the functions and measurement of money, show how banks create deposits, evaluate the money multiplier, explain bank runs and deposit insurance, and apply the quantity theory of money.
• Explain the Federal Reserve's dual mandate, policy rate and balance sheet tools, trace the transmission mechanism, and use the Taylor rule to evaluate monetary policy decisions.
• Use the aggregate demand and aggregate supply model to analyze demand and supply shocks, stagflation and self-correction, and calculate spending multipliers with taxes and imports.
• Analyze fiscal policy using primary and cyclically adjusted balances, automatic stabilizers and multiplier evidence, and apply debt dynamics to assess the sustainability of government debt.
• Interpret the balance of payments, link the current account to saving and investment, explain exchange rate determination, purchasing power parity and the trilemma, and analyze the macroeconomic effects of trade policy.
• Apply the expectations-augmented Phillips curve, evaluate major macroeconomic policy debates, and produce a balanced, evidence-based assessment of a current economic briefing.