• Introduction
  • 1.1 What Is Economics, and Why Is It Important?
  • 1.2 Microeconomics and Macroeconomics
  • 1.3 How Economists Use Theories and Models to Understand Economic Issues
  • 1.4 How To Organize Economies: An Overview of Economic Systems
  • Key Concepts and Summary
  • Self-Check Questions
  • Review Questions
  • Critical Thinking Questions
  • Introduction to Choice in a World of Scarcity
  • 2.1 How Individuals Make Choices Based on Their Budget Constraint
  • 2.2 The Production Possibilities Frontier and Social Choices
  • 2.3 Confronting Objections to the Economic Approach
  • Introduction to Demand and Supply
  • 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services
  • 3.2 Shifts in Demand and Supply for Goods and Services
  • 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process
  • 3.4 Price Ceilings and Price Floors
  • 3.5 Demand, Supply, and Efficiency
  • Introduction to Labor and Financial Markets
  • 4.1 Demand and Supply at Work in Labor Markets
  • 4.2 Demand and Supply in Financial Markets
  • 4.3 The Market System as an Efficient Mechanism for Information
  • Introduction to Elasticity
  • 5.1 Price Elasticity of Demand and Price Elasticity of Supply
  • 5.2 Polar Cases of Elasticity and Constant Elasticity
  • 5.3 Elasticity and Pricing
  • 5.4 Elasticity in Areas Other Than Price
  • Introduction to the Macroeconomic Perspective
  • 6.1 Measuring the Size of the Economy: Gross Domestic Product
  • 6.2 Adjusting Nominal Values to Real Values
  • 6.3 Tracking Real GDP over Time
  • 6.4 Comparing GDP among Countries
  • 6.5 How Well GDP Measures the Well-Being of Society
  • Introduction to Economic Growth
  • 7.1 The Relatively Recent Arrival of Economic Growth
  • 7.2 Labor Productivity and Economic Growth
  • 7.3 Components of Economic Growth
  • 7.4 Economic Convergence
  • Introduction to Unemployment
  • 8.1 How Economists Define and Compute Unemployment Rate
  • 8.2 Patterns of Unemployment
  • 8.3 What Causes Changes in Unemployment over the Short Run
  • 8.4 What Causes Changes in Unemployment over the Long Run
  • Introduction to Inflation
  • 9.1 Tracking Inflation
  • 9.2 How to Measure Changes in the Cost of Living
  • 9.3 How the U.S. and Other Countries Experience Inflation
  • 9.4 The Confusion Over Inflation
  • 9.5 Indexing and Its Limitations
  • Introduction to the International Trade and Capital Flows
  • 10.1 Measuring Trade Balances
  • 10.2 Trade Balances in Historical and International Context
  • 10.3 Trade Balances and Flows of Financial Capital
  • 10.4 The National Saving and Investment Identity
  • 10.5 The Pros and Cons of Trade Deficits and Surpluses
  • 10.6 The Difference between Level of Trade and the Trade Balance
  • Introduction to the Aggregate Supply–Aggregate Demand Model
  • 11.1 Macroeconomic Perspectives on Demand and Supply
  • 11.2 Building a Model of Aggregate Demand and Aggregate Supply
  • 11.3 Shifts in Aggregate Supply
  • 11.4 Shifts in Aggregate Demand
  • 11.5 How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
  • 11.6 Keynes’ Law and Say’s Law in the AD/AS Model
  • Introduction to the Keynesian Perspective
  • 12.1 Aggregate Demand in Keynesian Analysis
  • 12.2 The Building Blocks of Keynesian Analysis
  • 12.3 The Phillips Curve
  • 12.4 The Keynesian Perspective on Market Forces
  • Introduction to the Neoclassical Perspective
  • 13.1 The Building Blocks of Neoclassical Analysis
  • 13.2 The Policy Implications of the Neoclassical Perspective
  • 13.3 Balancing Keynesian and Neoclassical Models
  • Introduction to Money and Banking
  • 14.1 Defining Money by Its Functions
  • 14.2 Measuring Money: Currency, M1, and M2
  • 14.3 The Role of Banks
  • 14.4 How Banks Create Money
  • Introduction to Monetary Policy and Bank Regulation
  • 15.1 The Federal Reserve Banking System and Central Banks
  • 15.2 Bank Regulation
  • 15.3 How a Central Bank Executes Monetary Policy
  • 15.4 Monetary Policy and Economic Outcomes
  • 15.5 Pitfalls for Monetary Policy
  • Introduction to Exchange Rates and International Capital Flows
  • 16.1 How the Foreign Exchange Market Works
  • 16.2 Demand and Supply Shifts in Foreign Exchange Markets
  • 16.3 Macroeconomic Effects of Exchange Rates
  • 16.4 Exchange Rate Policies
  • Introduction to Government Budgets and Fiscal Policy
  • 17.1 Government Spending
  • 17.2 Taxation
  • 17.3 Federal Deficits and the National Debt
  • 17.4 Using Fiscal Policy to Fight Recession, Unemployment, and Inflation
  • 17.5 Automatic Stabilizers
  • 17.6 Practical Problems with Discretionary Fiscal Policy
  • 17.7 The Question of a Balanced Budget
  • Introduction to the Impacts of Government Borrowing
  • 18.1 How Government Borrowing Affects Investment and the Trade Balance
  • 18.2 Fiscal Policy and the Trade Balance
  • 18.3 How Government Borrowing Affects Private Saving
  • 18.4 Fiscal Policy, Investment, and Economic Growth
  • Introduction to Macroeconomic Policy around the World
  • 19.1 The Diversity of Countries and Economies across the World
  • 19.2 Improving Countries’ Standards of Living
  • 19.3 Causes of Unemployment around the World
  • 19.4 Causes of Inflation in Various Countries and Regions
  • 19.5 Balance of Trade Concerns
  • Introduction to International Trade
  • 20.1 Absolute and Comparative Advantage
  • 20.2 What Happens When a Country Has an Absolute Advantage in All Goods
  • 20.3 Intra-industry Trade between Similar Economies
  • 20.4 The Benefits of Reducing Barriers to International Trade
  • Introduction to Globalization and Protectionism
  • 21.1 Protectionism: An Indirect Subsidy from Consumers to Producers
  • 21.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions
  • 21.3 Arguments in Support of Restricting Imports
  • 21.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally
  • 21.5 The Tradeoffs of Trade Policy
  • A | The Use of Mathematics in Principles of Economics
  • B | The Expenditure-Output Model

Chapter Objectives

In this chapter, you will learn about:

  • What Is Economics, and Why Is It Important?
  • Microeconomics and Macroeconomics
  • How Economists Use Theories and Models to Understand Economic Issues
  • How Economies Can Be Organized: An Overview of Economic Systems

Bring It Home

Decisions ... decisions in the social media age.

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment. Economists call this “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

Now we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information disseminates through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

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  • Authors: Steven A. Greenlaw, David Shapiro
  • Publisher/website: OpenStax
  • Book title: Principles of Macroeconomics 2e
  • Publication date: Oct 11, 2017
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/principles-macroeconomics-2e/pages/1-introduction
  • Section URL: https://openstax.org/books/principles-macroeconomics-2e/pages/1-introduction

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Unit 1: Basic economics concepts

About this unit, introduction to macroeconomics.

  • Introduction to economics (Opens a modal)
  • Scarcity (Opens a modal)
  • Normative and positive statements (Opens a modal)
  • Economic models (Opens a modal)
  • Command and market economies (Opens a modal)
  • Lesson summary: Introduction to Macroeconomics (Opens a modal)
  • Introduction to scarcity and the economic way of thinking 4 questions Practice

Opportunity cost and the Production Possibilities Curve

  • Production possibilities curve (Opens a modal)
  • Opportunity cost (Opens a modal)
  • Increasing opportunity cost (Opens a modal)
  • PPCs for increasing, decreasing and constant opportunity cost (Opens a modal)
  • Production Possibilities Curve as a model of a country's economy (Opens a modal)
  • Lesson summary: Opportunity cost and the PPC (Opens a modal)
  • Opportunity cost and the PPC 4 questions Practice

Comparative advantage and the gains from trade

  • Comparative advantage, specialization, and gains from trade (Opens a modal)
  • Comparative advantage and absolute advantage (Opens a modal)
  • Opportunity cost and comparative advantage using an output table (Opens a modal)
  • Terms of trade and the gains from trade (Opens a modal)
  • Input approach to determining comparative advantage (Opens a modal)
  • When there aren't gains from trade (Opens a modal)
  • Comparative advantage worked example (Opens a modal)
  • Lesson summary: Comparative advantage and gains from trade (Opens a modal)
  • Comparative advantage and the gains from trade 4 questions Practice
  • Law of demand (Opens a modal)
  • Price of related products and demand (Opens a modal)
  • Change in expected future prices and demand (Opens a modal)
  • Changes in income, population, or preferences (Opens a modal)
  • Normal and inferior goods (Opens a modal)
  • Change in demand versus change in quantity demanded (Opens a modal)
  • Lesson summary: Demand and the determinants of demand (Opens a modal)
  • Demand 4 questions Practice
  • Law of supply (Opens a modal)
  • Factors affecting supply (Opens a modal)
  • Change in supply versus change in quantity supplied (Opens a modal)
  • Lesson summary: Supply and its determinants (Opens a modal)
  • Supply 4 questions Practice
  • Market equilibrium (Opens a modal)
  • Changes in market equilibrium (Opens a modal)
  • Changes in equilibrium price and quantity when supply and demand change (Opens a modal)
  • Lesson summary: Market equilibrium, disequilibrium, and changes in equilibrium (Opens a modal)
  • Market equilibrium and disequilibrium 4 questions Practice
  • Changes in equilibrium 4 questions Practice
  • Search Search Please fill out this field.

What Is Macroeconomics?

Understanding macroeconomics.

  • Macro vs. Microeconomics
  • Limitations
  • Schools of Thought

How to Influence Macroeconomics

The bottom line.

  • Macroeconomics

Macroeconomics Definition, History, and Schools of Thought

introduction to macroeconomics assignment

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

introduction to macroeconomics assignment

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

introduction to macroeconomics assignment

Macroeconomics is a branch of economics that studies the behavior of an overall economy, which encompasses markets, businesses, consumers, and governments. Macroeconomics examines economy-wide phenomena such as inflation, price levels, rate of economic growth, national income, gross domestic product (GDP), and changes in unemployment.

Some of the key questions addressed by macroeconomics include: What causes unemployment? What causes inflation? What creates or stimulates economic growth? Macroeconomics attempts to measure how well an economy is performing, understand what forces drive it, and project how performance can improve.

Key Takeaways

  • Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate, economy.
  • The two main areas of macroeconomic research are long-term economic growth and shorter-term business cycles.
  • Macroeconomics in its modern form is often defined as starting with John Maynard Keynes and his theories about market behavior and governmental policies in the 1930s; several schools of thought have developed since.
  • In contrast to macroeconomics, microeconomics is more focused on the influences on and choices made by individual actors—such as people, companies, and industries—in the economy.

Investopedia / Julie Bang

As the term implies, macroeconomics is a field of study that analyzes an economy through a wide lens. This includes looking at variables like unemployment, GDP , and inflation . In addition, macroeconomists develop models explaining the relationships between these factors.

These models, and the forecasts they produce, are used by government entities to aid in constructing and evaluating economic, monetary, and fiscal policy. Businesses use the models to set strategies in domestic and global markets, and investors use them to predict and plan for movements in various asset classes.

Properly applied, economic theories can illuminate how economies function and the long-term consequences of particular policies and decisions. Macroeconomic theory can also help individual businesses and investors make better decisions through a more thorough understanding of the effects of broad economic trends and policies on their own industries.

History of Macroeconomics

While the term "macroeconomics" dates back to the 1940s, many of the field's core concepts have been subjects of study for much longer. Topics like unemployment, prices, growth, and trade have concerned economists since the beginning of the discipline in the 1700s. Elements of earlier work from Adam Smith and John Stuart Mill addressed issues that would now be recognized as the domain of macroeconomics.

In its modern form, macroeconomics is often defined as starting with John Maynard Keynes and his book The General Theory of Employment, Interest, and Money in 1936. In it, Keynes explained the fallout from the Great Depression , when goods went unsold and workers were unemployed.

Throughout the 20th century, Keynesian economics, as Keynes' theories became known, diverged into several other schools of thought.

Before the popularization of Keynes' theories, economists generally did not differentiate between microeconomics and macroeconomics. The same microeconomic laws of supply and demand that operate in individual goods markets were understood to interact between individual markets to bring the economy into a general equilibrium , as described by Leon Walras .

The link between goods markets and large-scale financial variables such as price levels and interest rates was explained through the unique role that money plays in the economy as a medium of exchange by economists such as Knut Wicksell, Irving Fisher, and Ludwig von Mises.

Macroeconomics vs. Microeconomics

Macroeconomics differs from microeconomics , which focuses on smaller factors that affect choices made by individuals. Individuals are typically classified into subgroups, such as buyers, sellers , and business owners. These actors interact with each other according to the laws of supply and demand for resources, using money and interest rates as pricing mechanisms for coordination. Factors studied in both microeconomics and macroeconomics typically influence one another.

A key distinction between microeconomics and macroeconomics is that macroeconomic aggregates can sometimes behave in very different ways or even the opposite of similar microeconomic variables. For example, Keynes referenced the so-called Paradox of Thrift, which argues that individuals save money to build wealth on a microeconomic level. However, when everyone tries to increase their savings at once, it can contribute to a slowdown in the economy and less wealth in the aggregate, macroeconomic level. This is because there would be a reduction in spending, affecting business revenues, and lowering worker pay.

Limits of Macroeconomics

It is also important to understand the limitations of economic theory. Theories are often created in a vacuum and lack specific real-world details like taxation, regulation, and transaction costs. The real world is also decidedly complicated and includes matters of social preference and conscience that do not lend themselves to mathematical analysis.

It is common to find the phrase ceterus paribus , loosely translated as "all else being equal," in economic theories and discussions. Economists use this phrase to focus on specific relationships between variables being discussed, while assuming all other variables remain fixed.

Even with the limits of economic theory, it is important and worthwhile to follow significant macroeconomic indicators like GDP, inflation, and unemployment. This is because the performance of companies, and by extension their stocks, is significantly influenced by the economic conditions in which the companies operate.

Likewise, it can be invaluable to understand which theories are currently in favor, and how they may be influencing a particular government administration. Such economic theories can say much about how a government will approach taxation, regulation, government spending, and similar policies. By better understanding economics and the ramifications of economic decisions, investors can get at least a glimpse of the probable future and act accordingly with confidence.

Macroeconomic Schools of Thought

The field of macroeconomics is organized into many different schools of thought, with differing views on how the markets and their participants operate.

Classical economists held that prices, wages, and rates are flexible and markets tend to clear unless prevented from doing so by government policy; these ideas build on Adam Smith's original theories. The term “classical economists” is not actually a school of macroeconomic thought but a label applied first by Karl Marx and later by Keynes to denote previous economic thinkers with whom they disagreed.

Keynesian economics was founded mainly based on the works of John Maynard Keynes and was the beginning of macroeconomics as a separate area of study from microeconomics. Keynesians focus on aggregate demand as the principal factor in issues like unemployment and the business cycle.

Keynesian economists believe that the business cycle can be managed by active government intervention through fiscal policy, where governments spend more in recessions to stimulate demand or spend less in expansions to decrease it. They also believe in monetary policy, where a central bank stimulates lending with lower rates or restricts it with higher ones.

Keynesian economists also believe that certain rigidities in the system, particularly sticky prices , prevent the proper clearing of supply and demand.

The Monetarist school is a branch of Keynesian economics credited mainly to the works of Milton Friedman. Working within and extending Keynesian models, Monetarists argue that monetary policy is generally a more effective and desirable policy tool to manage aggregate demand than fiscal policy. However, monetarists also acknowledge limits to monetary policy that make fine-tuning the economy ill-advised and instead tend to prefer adherence to policy rules that promote stable inflation rates.

New Classical

The New Classical school, along with the New Keynesians, is mainly built on integrating microeconomic foundations into macroeconomics to resolve the glaring theoretical contradictions between the two subjects.

The New Classical school emphasizes the importance of microeconomics and models based on that behavior. New Classical economists assume that all agents try to maximize their utility and have rational expectations , which they incorporate into macroeconomic models. New Classical economists believe that unemployment is largely voluntary and that discretionary fiscal policy destabilizes, while inflation can be controlled with monetary policy.

New Keynesian

The New Keynesian school also attempts to add microeconomic foundations to traditional Keynesian economic theories. While New Keynesians accept that households and firms operate based on rational expectations, they still maintain that there are a variety of market failures, including sticky prices and wages. Because of this "stickiness," the government can improve macroeconomic conditions through fiscal and monetary policy.

The Austrian Schoo l is an older school of economics that is seeing some resurgence in popularity. Austrian economic theories mainly apply to microeconomic phenomena. However, like the so-called classical economists, they never strictly separated microeconomics and macroeconomics.

Austrian theories also have important implications for what are otherwise considered macroeconomic subjects. In particular, the Austrian business cycle theory explains broadly synchronized (macroeconomic) swings in economic activity across markets due to monetary policy and the role that money and banking play in linking (microeconomic) markets to each other and across time. 

Macroeconomic Indicators

Macroeconomics is a rather broad field, but two specific research areas dominate the discipline. The first area looks at the factors that determine long-term economic growth . The other looks at the causes and consequences of short-term fluctuations in national income and employment, also known as the business cycle .

Economic Growth

Economic growth refers to an increase in aggregate production in an economy. Macroeconomists try to understand the factors that either promote or retard economic growth to support economic policies that will support development, progress, and rising living standards.

Economists can use many indicators to measure economic performance. These indicators fall into 10 categories:

  • Gross Domestic Product indicators : Measure how much the economy produces
  • Consumer Spending indicators : Measure how much capital consumers feed back into the economy
  • Income and Savings indicators : Measure how much consumers make and save
  • Industry Performance indicators : Measure GDP by industry
  • International Trade and Investment indicators : Indicate the balance of payments between trade partners, how much is traded, and how much is invested internationally
  • Prices and Inflation indicators : Indicate fluctuations in prices paid for goods and services and changes in currency purchasing power
  • Investment in Fixed Assets indicators : Indicate how much capital is tied up in fixed assets
  • Employment indicators : Show employment by industry, state, county, and other areas
  • Government indicators : Show how much the government spends and receives
  • Special indicators : Include all other economic indicators, such as distribution of personal income, global value chains, healthcare spending, small business well-being, and more

The Business Cycle

Superimposed over long-term macroeconomic growth trends, the levels and rates of change of significant macroeconomic variables such as employment and national output go through fluctuations. These fluctuations are called expansions, peaks, recessions, and troughs—they also occur in that order. When charted on a graph, these fluctuations show that businesses perform in cycles; thus, it is called the business cycle.

The National Bureau of Economic Research (NBER) measures the business cycle, which uses GDP and Gross National Income to date the cycle. The NBER is also the agency that declares the beginning and end of recessions and expansions.

Because macroeconomics is such a broad area, positively influencing the economy is challenging and takes much longer than changing the individual behaviors within microeconomics. Therefore, economies need to have an entity dedicated to researching and identifying techniques that can influence large-scale changes.

In the U.S., the Federal Reserve is the central bank with a mandate of promoting maximum employment and price stability. These two factors have been identified as essential to positively influencing change at the macroeconomic level.

To influence change, the Fed implements monetary policy through tools it has developed over the years, which work to affect its dual mandates. It has the following tools it can use:

  • Federal Funds Rate Range : A target range set by the Fed that guides interest rates on overnight lending between depository institutions to boost short-term borrowing
  • Open Market Operations : Purchase and sell securities on the open market to change the supply of reserves
  • Discount Window and Rate : Lending to depository institutions to help banks manage liquidity
  • Reserve Requirements : Maintaining a reserve to help banks maintain liquidity
  • Interest on Reserve Balances : Encourages banks to hold reserves for liquidity and pays them interest for doing so
  • Overnight Repurchase Agreement Facility : A supplementary tool used to help control the federal funds rate by selling securities and repurchasing them the next day at a more favorable rate
  • Term Deposit Facility : Reserve deposits with a term, used to drain reserves from the banking system
  • Central Bank Liquidity Swaps : Established swap lines for central banks from select countries to improve liquidity conditions in the U.S. and participating countries' central banks
  • Foreign and International Monetary Authorities Repo Facility : A facility for institutions to enter repurchase agreements with the Fed to act as a backstop for liquidity
  • Standing Overnight Repurchase Agreement Facility : A facility to encourage or discourage borrowing above a set rate, which helps to control the effective federal funds rate

The Fed continuously updates the tools it uses to influence the economy, so it has a list of many other previously used tools it can implement again if needed.

What is the most important concept in all of macroeconomics?

The most important concept in all of macroeconomics is said to be output, which refers to the total amount of good and services a country produces. Output is often considered a snapshot of an economy at a given moment.

What are the 3 Major Concerns of Macroeconomics?

Three major macroeconomic concerns are the unemployment level, inflation, and economic growth.

Why Is Macroeconics Important?

Macroeconomics helps a government evaluate how an economy is performing and decide on actions it can take to increase or slow growth.

Macroeconomics is a field of study used to evaluate overall economic performance and develop actions that can positively affect an economy. Economists work to understand how specific factors and actions affect output, input, spending, consumption, inflation, and employment.

The study of economics began long ago, but the field didn't start evolving into its current form until the 1700s. Macroeconomics now plays a large part in government and business decision-making.

Bureau of Economic Analysis. " Data by Topic ."

National Bureau of Economic Research. " US Business Cycle Expansions and Contractions ."

Board of Governors of the Federal Reserve. " Policy Tools ."

Board of Governors of the Federal Reserve System. " Policy Tools | Expired Tools ."

  • Economics Defined with Types, Indicators, and Systems 1 of 33
  • Economy: What It Is, Types of Economies, Economic Indicators 2 of 33
  • A Brief History of Economics 3 of 33
  • Is Economics a Science? 4 of 33
  • Finance vs. Economics: What's the Difference? 5 of 33
  • Macroeconomics Definition, History, and Schools of Thought 6 of 33
  • Microeconomics Definition, Uses, and Concepts 7 of 33
  • 4 Economic Concepts Consumers Need to Know 8 of 33
  • Law of Supply and Demand in Economics: How It Works 9 of 33
  • Demand-Side Economics Definition, Examples of Policies 10 of 33
  • Supply-Side Theory: Definition and Comparison to Demand-Side 11 of 33
  • What Is a Market Economy and How Does It Work? 12 of 33
  • Command Economy: Definition, How It Works, and Characteristics 13 of 33
  • Economic Value: Definition, Examples, Ways To Estimate 14 of 33
  • Keynesian Economics Theory: Definition and How It's Used 15 of 33
  • Social Economics Meaning and Impact with Examples 16 of 33
  • Economic Indicator: Definition and How to Interpret 17 of 33
  • Top 10 U.S. Economic Indicators 18 of 33
  • Gross Domestic Product (GDP): Formula and How to Use It 19 of 33
  • What Is GDP and Why Is It So Important to Economists and Investors? 20 of 33
  • Consumer Spending: Definition, Measurement, and Importance 21 of 33
  • Retail Sales: Definition, Measurement, and Use As an Economic Indicator 22 of 33
  • Job Market: Definition, Measurement, Example 23 of 33
  • The Top 25 Economies in the World 24 of 33
  • What Are Some Examples of Free Market Economies? 25 of 33
  • Is the United States a Market Economy or a Mixed Economy? 26 of 33
  • Primary Drivers of the Chinese Economy 27 of 33
  • Japan Inc.: What It is, How It Works, History 28 of 33
  • The Fundamentals of How India Makes Its Money 29 of 33
  • European Union (EU): What It Is, Countries, History, Purpose 30 of 33
  • The German Economic Miracle Post WWII 31 of 33
  • The Economy of the United Kingdom 32 of 33
  • How the North Korean Economy Works 33 of 33

introduction to macroeconomics assignment

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Introduction of Macroeconomics

Macroeconomics is the branch of economics concerned with the study of aggregate economic activity. In macroeconomics, a variety of economy-wide phenomena is thoroughly examined such as, inflation, price levels, rate of growth, national income, gross domestic product and changes in unemployment. It focuses on trends in the economy and how the economy moves as a whole.

Macroeconomics is concerned primarily with the forecasting of national income, through the analysis of major economic factors that show predictable patterns and trends, and of their influence on one another. These factors include level of employment/unemployment, gross national product (GNP), balance of payments position, and prices (deflation or inflation). Macroeconomics also covers role of fiscal and monetary policies, economic growth, and determination of consumption and investment levels.

Macroeconomics differs from microeconomics, which focuses on smaller factors that affect choices made by individuals and companies. Factors studied in both microeconomics and macroeconomics typically have an influence on one another.

It is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy.

Research of Macroeconomics

Macroeconomics is a rather broad field, but two specific areas of research are representative of this discipline. One area involves the process of understanding the causation and consequences of short-term fluctuations in national income, also known as the business cycle. The other area involves the process by which macroeconomics attempts to understand the factors that determine long-term economic growth, or increases in the national income.

Macroeconomics encompasses a variety of concepts and variables, but there are three central topics for macroeconomic research. Macroeconomic theories usually relate the phenomena of output, unemployment, and inflation. Outside of macroeconomic theory, these topics are also important to all economic agents including workers, consumers, and producers.

Cause and Effect of Macroeconomics

Thomas Sargent has shown how structural macroeconometrics can be used to analyze permanent changes in economic policy. This method can be applied to study macroeconomic relationships when households and firms adjust their expectations concurrently with economic developments. Sargent has examined, for instance, the post-World War II era, when many countries initially tended to implement a high-inflation policy, but eventually introduced systematic changes in economic policy and reverted to a lower inflation rate.

Christopher Sims has developed a method based on so-called vector autoregression to analyze how the economy is affected by temporary changes in economic policy and other factors. Sims and other researchers have applied this method to examine, for instance, the effects of an increase in the interest rate set by a central bank. It usually takes one or two years for the inflation rate to decrease, whereas economic growth declines gradually already in the short run and does not revert to its normal development until after a couple of years.

Although Sargent and Sims carried out their research independently, their contributions are complementary in several ways. The laureates’ seminal work during the 1970s and 1980s has been adopted by both researchers and policymakers throughout the world. Today, the methods developed by Sargent and Sims are essential tools in macroeconomic analysis.

Macroeconomic Factor

A macroeconomic factor is a factor that is pertinent to a broad economy at the regional or national level and affects a large population rather than a few select individuals. Macroeconomic factors such as economic output, unemployment, inflation, savings and investment are key indicators of economic performance and are closely monitored by governments, businesses and consumers.

A macroeconomic factor can include anything that influences the direction of a particular large-scale market. Items such as fiscal policy and various regulations can impact the economy of a state or nation, and can even have international implications. Not all macroeconomic factors are negative, such as those that promote economic growth.

Ecological Rationality

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Macroeconomics

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Table of Contents

Course contents.

  • About This Course
  • Course Contents at a Glance
  • Learning Outcomes

Faculty Resources

  • Faculty Resource Overview
  • Offline Content Access
  • PowerPoints
  • Assignments
  • Problem Sets
  • Question Banks
  • I Need Help

Resources: Discussions and Assignments

  • Module 1 Discussion: Is Economics a Science?
  • Module 1 Assignment: Problem Set — Economic Thinking
  • Module 2 Discussion: Making Irrational Choices
  • Module 2 Assignment: Guns or Butter?
  • Module 2 Assignment: Problem Set — Choice in a World of Scarcity
  • Module 3 Discussion: Supply and Demand
  • Module 3 Assignment: Supply and Demand of Coffee
  • Module 3 Assignment: Problem Set — Supply and Demand
  • Module 4 Discussion: Price Controls
  • Module 4 Assignment: Price Controls After a Storm
  • Module 4 Assignment: Problem Set — Applications of Supply and Demand
  • Module 5 Discussion: Junk Food and Elasticity
  • Module 5 Assignment: Elasticity and Tuition
  • Module 5 Assignment: Problem Set — Elasticity
  • Module 6 Discussion: GDP and Economic Growth
  • Module 6 Assignment: Data Project Part 1
  • Module 6 Assignment: Problem Set — GDP and Economic Growth
  • Module 7 Assignment: The State of the Macro Economy
  • Module 7 Assignment: Data Project Part 2
  • Module 7 Discussion: How is the Economy?
  • Module 7 Assignment: Problem Set — Unemployment and Inflation
  • Module 8 Discussion: The Business Cycle and the AD-AS Model
  • Module 8 Assignment: Analysis of a Demand/Supply Shock using the AD-AS Model
  • Module 8 Assignment: Problem Set — The Aggregate Demand-Aggregate Supply Model
  • Module 9 Discussion: Keynesian vs. Neoclassical Economics
  • Module 9 Assignment: Keynesian and Neoclassical Economics
  • Module 9 Assignment: Problem Set — Keynesian and Neoclassical Economics
  • Module 10 Discussion: The Income-Expenditure Model
  • Module 10 Assignment: The Income-Expenditure Model
  • Module 10 Assignment: Problem Set — The Income-Expenditure Model
  • Module 11 Discussion: Fiscal Policy
  • Module 11 Assignment: Economic Impact of Lower Corporate Tax Rate
  • Module 11 Assignment: Problem Set — Fiscal Policy
  • Module 12 Discussion: Money and Banking
  • Module 12 Assignment: Baby Boomers
  • Module 12 Assignment: Problem Set — Money and Banking
  • Module 13 Discussion: Impact of Low Interest Rates on Monetary Policy
  • Module 13 Assignment: Monetary Policy, Output, and Prices
  • Module 13 Assignment: Problem Set — Monetary Policy
  • Module 14 Discussion: Macropolicy
  • Module 14 Assignment: Policy Response to a Macro Shock
  • Module 14 Assignment: Problem Set — Policy Applications
  • Module 15 Discussion: Absolute and Comparative Advantage
  • Module 15 Assignment: Absolute and Comparative Advantage
  • Module 15 Assignment: Problem Set — Globalization and Trade
  • Module 16 Discussion: Global Currencies
  • Module 16 Assignment: Exchange Rates and International Finance
  • Module 16 Assignment: Problem Set — Exchange Rates and International Finance

Module 1: Economic Thinking

  • Why It Matters: Economic Thinking
  • Introduction to Economics
  • Understanding Economics and Scarcity
  • The Concept of Opportunity Cost
  • Labor, Markets, and Trade
  • Microeconomics and Macroeconomics
  • Introduction to Math in Economics
  • Economic Models
  • Purpose of Functions
  • Solving Simple Equations
  • Introduction to Graphs in Economics
  • Creating and Interpreting Graphs
  • Interpreting Slope
  • Types of Graphs
  • Putting It Together: Economic Thinking
  • Discussion: Is Economics a Science?
  • Assignment: Problem Set — Economic Thinking

Module 2: Choice in a World of Scarcity

  • Why It Matters: Choice in a World of Scarcity
  • Introduction to the Cost of Choices
  • Budget Constraints and Choices
  • Calculating Opportunity Cost
  • Learn By Doing: Budget Constraints and Opportunity Cost
  • Introduction to the Production Possibilities Frontier
  • The Production Possibilities Frontier
  • Productive Efficiency and Allocative Efficiency
  • Introduction to the Economic Way of Thinking
  • Rationality and Self-Interest
  • Marginal Analysis
  • Positive and Normative Statements
  • Putting It Together: Choice in a World of Scarcity
  • Discussion: Making Irrational Choices
  • Assignment: Guns or Butter?
  • Assignment: Problem Set — Choice in a World of Scarcity

Module 3: Supply and Demand

  • Why It Matters: Supply and Demand
  • Introduction to Economic Systems
  • Economic Systems
  • Introduction to Demand
  • What Is Demand?
  • Factors Affecting Demand
  • Learn By Doing: Graphing Demand
  • Learn By Doing: Demand for Food Trucks
  • Introduction to Supply
  • What is Supply?
  • Factors Affecting Supply
  • Learn By Doing: Graphing Supply and Demand
  • Learn By Doing: Supply of Food Trucks
  • Introduction to Equilibrium
  • Equilibrium, Surplus, and Shortage
  • Changes in Equilibrium
  • Finding Equilibrium
  • Changes in Supply and Demand
  • Learn By Doing: Food Trucks and Changes in Equilibrium
  • Learn By Doing: Calculating Equilibrium
  • Putting It Together: Supply and Demand
  • Discussion: Supply and Demand
  • Assignment: Supply and Demand of Coffee
  • Assignment: Problem Set — Supply and Demand

Module 4: Applications of Supply and Demand

  • Why It Matters: Applications of Supply and Demand
  • Introduction to Price Ceilings and Price Floors
  • Price Ceilings
  • Price Floors
  • Learn By Doing: Shortage and Surplus
  • A Closer Look at Price Controls
  • Introduction to Surplus
  • Trade and Efficiency
  • Consumer & Producer Surplus
  • Inefficiency of Price Floors and Price Ceilings
  • Learn By Doing: Consumer and Producer Surplus
  • Introduction to Labor and Financial Markets
  • Labor and Financial Markets
  • Putting It Together: Applications of Supply and Demand
  • Discussion: Price Controls
  • Assignment: Price Controls After a Storm
  • Assignment: Problem Set — Applications of Supply and Demand

Module 5: Elasticity

  • Why It Matters: Elasticity
  • Introduction to Elasticity
  • Elasticity of Demand
  • Examples of Elastic and Inelastic Demand
  • Introduction to Calculating Price Elasticity
  • Calculating Elasticity and Percentage Changes
  • Calculating Price Elasticities Using the Midpoint Formula
  • Learn By Doing: Calculating Price Elasticities
  • Categories of Elasticity
  • Price Elasticity of Supply
  • Introduction to Elasticities in Areas Other Than Price
  • Income Elasticity, Cross-Price Elasticity & Other Types of Elasticities
  • Introduction to Price Elasticity and Total Revenue
  • Elasticity and Total Revenue
  • Elasticity, Costs, and Customers
  • Tax Incidence
  • Putting It Together: Elasticity
  • Discussion: Junk Food and Elasticity
  • Assignment: Elasticity and Tuition
  • Assignment: Problem Set — Elasticity

Module 6: Macroeconomic Measures — GDP and Economic Growth

  • Why It Matters: GDP and Economic Growth
  • Introduction to Macroeconomics and GDP
  • The Macroeconomic Perspective
  • What is Gross Domestic Product?
  • Calculating GDP
  • Alternative Ways to Measure the Economy
  • Introduction to Nominal and Real GDP
  • The Difference Between Nominal and Real Measurements
  • Comparing Nominal and Real GDP
  • Converting Nominal to Real GDP
  • Learn By Doing: Comparing Nominal and Real GDP
  • Introduction to Economic Growth
  • Business Cycles
  • GDP and Standard of Living
  • Labor Productivity and Economic Growth
  • Measuring Productivity and Growth Rates
  • The Power of Sustained Economic Growth
  • Introduction to Historical Economic Growth
  • Relatively Recent Economic Growth
  • A Healthy Climate for Economic Growth
  • Putting It Together: GDP and Economic Growth
  • Discussion: GDP and Economic Growth
  • Assignment: Data Project Part 1
  • Assignment: Problem Set — GDP and Economic Growth

Module 7: Macroeconomic Measures — Unemployment and Inflation

  • Why It Matters: Unemployment and Inflation
  • Introduction to the Unemployment Rate
  • Who Counts in Unemployment?
  • Calculating the Unemployment Rate
  • Learn By Doing: Calculating the Unemployment Rate
  • Patterns of Unemployment
  • Introduction to Types of Unemployment
  • Cyclical Unemployment
  • Frictional and Structural Unemployment
  • The Natural Rate of Unemployment
  • Introduction to Inflation
  • Calculating Inflation with Index Numbers
  • Learn By Doing: Calculating Inflation with Index Numbers
  • The Consumer Price Index
  • Shortcomings of the Consumer Price Index as a Measure of the Cost of Living
  • The GDP Deflator and Other Major Price Indices
  • Introduction to Price Instability
  • Problems with Inflation
  • Learn By Doing: Problems with Inflation
  • Benefits of Low Inflation
  • Putting It Together: Inflation and Unemployment
  • Assignment: The State of the Macro Economy
  • Assignment: Data Project Part 2
  • Discussion: How is the Economy?
  • Assignment: Problem Set — Unemployment and Inflation

Module 8: The Aggregate Demand-Aggregate Supply Model

  • Why It Matters: The Aggregate Demand-Aggregate Supply Model
  • Introduction to the Aggregate Demand-Aggregate Supply Model
  • The Aggregate Demand-Aggregate Supply Model
  • Building a Model of Aggregate Supply and Aggregate Demand
  • Interpreting the AD-AS Model
  • Introduction to Shifts in Aggregate Supply and Demand
  • Shifts in Aggregate Demand
  • Shifts in Aggregate Supply
  • Introduction to the AD–AS Model and Economic Growth
  • Business Cycles and Growth in the AD–AS Model
  • Learn By Doing: Business Cycles and Growth in the AD–AS Model
  • Putting It Together: The Aggregate Demand-Aggregate Supply Model
  • Discussion: The Business Cycle and the AD-AS Model
  • Assignment: Analysis of a Demand/Supply Shock using the AD-AS Model
  • Assignment: Problem Set — The Aggregate Demand-Aggregate Supply Model

Module 9: Keynesian and Neoclassical Economics

  • Why It Matters: Keynesian and Neoclassical Economics
  • Introduction to Keynesian Economics and the AD-AS Model
  • Aggregate Demand in Keynesian Analysis
  • The Core of Keynesian Analysis
  • Introduction to Keynesian Policy Implications
  • The Expenditure Multiplier Effect
  • Keynesian Economic Policy
  • Introduction to Neoclassical Economics
  • The Neoclassical Perspective
  • The Neoclassical Perspective and Potential GDP
  • Learn By Doing: The Neoclassical Perspective and Potential GDP
  • Introduction to the Neoclassical Perspective and the AD-AS Model
  • Flexible Prices and Graphing in the Neoclassical Model
  • Learn By Doing: Flexible Prices and Graphing in the Neoclassical Model
  • Speed of Macroeconomic Adjustment
  • Policy Implications of the Neoclassical Perspective
  • Introduction to Comparing the Keynesian and Neoclassical Perspectives
  • Say's Law versus Keynes' Law
  • Neoclassical and Keynesian Perspectives in the AD-AS Model
  • Balancing Keynesian and Neoclassical Models
  • Putting It Together: Keynesian and Neoclassical Economics
  • Discussion: Keynesian vs. Neoclassical Economics
  • Assignment: Keynesian and Neoclassical Economics
  • Assignment: Problem Set — Keynesian and Neoclassical Economics

Module 10: The Income-Expenditure Model

  • Why It Matters: The Income-Expenditure Model
  • Introduction to the Income-Expenditure Model
  • The Key Role of Aggregate Expenditure
  • Aggregate Expenditure: Consumption
  • Aggregate Expenditure: Investment, Government Spending, and Net Exports
  • Introduction to Equilibrium in the Income-Expenditure Model
  • Equilibrium in the Income-Expenditure Model
  • Finding Equilibrium Using Algebra
  • Learn By Doing: Finding Equilibrium Using Algebra
  • Recessionary and Inflationary Gaps in the Income-Expenditure Model
  • Real Aggregate Supply in the Income-Expenditure Model
  • Introduction to the Expenditure Multiplier in the Income-Expenditure Model
  • The Spending Multiplier in the Income-Expenditure Model
  • The Spending Multiplier and Changes in Government Spending
  • Putting It Together: The Income-Expenditure Model
  • Discussion: The Income-Expenditure Model
  • Assignment: The Income-Expenditure Model
  • Assignment: Problem Set — The Income-Expenditure Model

Module 11: Fiscal Policy

  • Why It Matters: Fiscal Policy
  • Introduction to Budgets and Taxes
  • Fiscal Policy and the Federal Budget
  • Government Spending
  • State and Local Government Spending
  • Federal Budgets and National Debt
  • The Question of a Balanced Budget
  • Introduction to Fiscal Policy in Action
  • Automatic Stabilizers
  • Expansionary and Contractionary Fiscal Policy
  • Learn By Doing: Expansionary and Contractionary Fiscal Policy
  • Introduction to Fiscal Policy Approaches
  • Neoclassical Fiscal Policy and Supply-Side Economics
  • Fiscal Policy, Investment, and Crowding Out
  • Putting It Together: Fiscal Policy
  • Discussion: Fiscal Policy
  • Assignment: Economic Impact of Lower Corporate Tax Rate
  • Assignment: Problem Set — Fiscal Policy

Module 12: Money and Banking

  • Why It Matters: Money and Banking
  • Introduction to Defining Money
  • Defining Money by Its Functions
  • Measuring Money: Currency, M1, and M2
  • Introduction to Financial Markets
  • Financial Markets and Assets
  • Financial Markets, Supply and Demand, and Interest
  • Introduction to Banking
  • The Commercial Banking System
  • Banking Assets and Liabilities
  • Introduction to Lending and Money Creation
  • How Banks Create Money
  • Putting It Together: Money and Banking
  • Discussion: Money and Banking
  • Assignment: Baby Boomers
  • Assignment: Problem Set — Money and Banking

Module 13: Monetary Policy

  • Why It Matters: Monetary Policy
  • Introduction to the Federal Reserve
  • Banks, Loan Finance, and the Payments System
  • The Federal Reserve System and Central Banks
  • Bank Regulation
  • Introduction to Monetary Policy
  • Monetary Policy
  • Monetary Policy and Open Market Operations
  • Learn By Doing: Monetary Policy and Open Market Operations
  • Introduction to Monetary Policy and Economic Outcomes
  • Monetary Policy and Interest Rates
  • Monetary Policy and Aggregate Demand
  • Federal Reserve Actions and Quantitative Easing
  • Putting It Together: Monetary Policy
  • Discussion: Impact of Low Interest Rates on Monetary Policy
  • Assignment: Monetary Policy, Output, and Prices
  • Assignment: Problem Set — Monetary Policy

Module 14: Policy Applications

  • Why It Matters: Policy Applications
  • Introduction to Keynesian and Neoclassical Policy Prescriptions
  • Viewpoints on Government Policy
  • Introduction to the Phillips Curve
  • The Phillips Curve
  • Policy Implications: No Phillips Curve Tradeoff in the Long Run
  • Learn By Doing: The Phillips Curve
  • Introduction to New Classical Economics
  • Rational Expectations
  • Ricardian Equivalence
  • Introduction to Macro Policy Options in the Real World
  • Practical Problems with Discretionary Fiscal & Monetary Policy
  • Policy Implications: Dampening Business Cycles vs. Laissez-Faire
  • Policy Implications: Supply Shocks and Economic Growth
  • Putting It Together: Policy Application
  • Discussion: Macropolicy
  • Assignment: Policy Response to a Macro Shock
  • Assignment: Problem Set — Policy Applications

Module 15: Globalization and Trade

  • Why It Matters: Globalization and International Trade
  • Introduction to Comparative Advantage
  • Absolute and Comparative Advantage
  • Comparative Advantage and the Gains from Trade
  • Learn By Doing: Comparative Advantage and the Gains from Trade
  • Learn By Doing: International Trade
  • Intra-Industry Trade
  • Demand and Supply Analysis of International Trade
  • Learn By Doing: Demand and Supply Analysis of International Trade
  • Introduction to the Trade Barriers and Protectionism
  • Protectionism
  • The Tradeoffs of International Trade
  • Introduction to Trade Policy and Agreements
  • The Role of the GATT in Reducing Barriers to Trade
  • Trade Policy: Organizations and Agreements
  • Putting It Together: Globalization and International Trade
  • Discussion: Absolute and Comparative Advantage
  • Assignment: Absolute and Comparative Advantage
  • Assignment: Problem Set — Globalization and Trade

Module 16: Exchange Rates and International Finance

  • Why It Matters: Exchange Rates and International Finance
  • Introduction to the Foreign Exchange Market
  • The Foreign Exchange Market
  • Strengthening and Weakening Currency
  • Introduction to Exchange Rates and Purchasing Power
  • Demand and Supply Shifts in Foreign Exchange Markets
  • Introduction to Exchange Rates and the Trade Balance
  • Macroeconomic Effects of Exchange Rates
  • Exchange-Rate Policies
  • Putting It Together: Exchange Rates and International Finance
  • Discussion: Global Currencies
  • Assignment: Exchange Rates and International Finance
  • Assignment: Problem Set — Exchange Rates and International Finance

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Introduction to Macroeconomics Fall 2022 ECON 102

Published Sep 07, 2022

Class Schedule

Instructor & ta (teaching assistant) information, course description.

This course introduces students to the measurement and behaviour of key macroeconomic variables both in Canada and around the world. Topics include national accounts, inflation, interest rates, wages, international balance of payments, business cycles, growth, employment, unemployment, poverty, and inequality.

Additional information about the course:

The main goals of this course are to provide a good understanding of key macroeconomic concepts and aggregates, the interaction between different agents and sectors in the economy, how economies operate at the aggregate level, and the challenges policymakers face when setting policy.

The course will introduce important concepts in macroeconomics such as the determinants of output and employment, the causes and costs of inflation, the types and reasons for unemployment, the role of government, the central bank and financial institutions in the economy, the determinants of the exchange rate and the importance of fiscal and monetary policy. 

Although this course will primarily focus on short-run fluctuations and closed economies, students will also learn about the determinants of economic growth and issues related to the open economy. We will apply the concepts learned in class to understand macroeconomic events in Canada and around the world.

Students are strongly encouraged to attend all lectures, participate in class discussions, and attempt the quizzes and sample questions that will be posted on LEARN. 

Learning Outcomes

Tentative course schedule.

Lecture notes and readings will be posted before each class on UW LEARN (https://learn.uwaterloo.ca). You are required to read ahead all the lecture notes and required materials. It will be easier for you to follow the class if you read the lecture notes before coming to class. Below is a list of topics I intend to cover in class. 

I: Introduction and basic concepts? (Week 1) 

  • What is macroeconomics?
  • What do macroeconomists do?
  • What tools do macroeconomists use

Readings :  Lecture notes chapter 1 and MSL chapter 1,

II: The Data of Macroeconomics and Why We Use Them (Weeks 2, 3)

  • Gross Domestic Product:  determinants and measurement
  • The consumer price index and inflation
  • The unemployment rate and the LFS

Readings :  Lecture notes chapters 2a, 2b, and 2c and MSL chapter 2

III: The Canadian Financial System (Week 4)

  • Financial markets and financial intermediaries: Why are they important?
  • Banking and financial system in Canada
  • Financial crises and the financial system

Readings :  Lecture notes chapter 3, MSL chapter 4 (section 4.2), chapter 18

IV: Money and inflation (Week 6)

  • What is money?
  • Why is money special as an asset?
  • What are the costs of inflation?

Readings: Lecture notes chapter 4, MSL chapters 4 (section 4.1) 5 (section 5.1. 5.2, 5.3, 5.5, 5.6)  

V: Monetary Policy and the Bank of Canada (Week 7)

  • Role and functions of the Bank of Canada
  • Instrument and implementation of monetary policy in Canada
  • Transmission of monetary policy in Canada

Readings: Lecture notes chapter 5, MSL chapter 4 (sections 4.3)   

VI: The Government and Fiscal Policy (Week 8)

  • Government’s revenue and expenditure
  • Public debt and budget balance
  • Fiscal policy in Canada

Readings: Lecture notes chapter 6, MSL chapter 17 (sections 17.1 – 17.4)

VII: Unemployment and The Labour Market (Week 9)

  • Demand and supply of labour
  • Categories of unemployment
  • Causes of unemployment

Readings:   Lecture notes chapter 7, MSL chapter 7

VIII: The Exchange Rate and the Balance of Payments (Week 10)

  • Foreign exchange market and exchange rate policy
  • Balance of payments
  • Open-economy monetary and fiscal policy

Readings:   Lecture notes chapter 9, MSL chapter 6 (sections 6.1, 6.3)

IX: Economic Growth (Week 11)

  • Stylized facts about economic growth
  • Technology and economic growth

Readings:   Lecture notes chapter 10 

Texts / Materials

I will make copies of my lecture notes available on UW-LEARN. In addition to the lecture notes and book chapters, there are several required readings for this class. I will post these readings on LEARN throughout the term, and I will let you know which readings are compulsory or not.  The lecture notes on LEARN are your primary source of material for the course. The textbook will be used to supplement the slides posted on LEARN.

Student Assessment

All assignments will be posted on Learn at least 7-10 days before the deadline. Please submit your assignments in the appropriate Dropbox. The dropbox will remain open until the deadline.  Collaboration on assignments is allowed. Still, you are required to answer all the assignment questions independently. You must also indicate the names of the persons you collaborated with on any assignments.  

Given that only one TA is assigned for this course, all assignments will be marked as either 0/100, 50/100 or 100/100. You will receive a grade of zero if you do not submit the assignment on time or if the submitted work is blank or very poorly executed. You will receive a grade of 50/100 if the assignment is submitted on time but is incomplete and not up to expectations. You will receive full marks if the work is submitted on time, appropriately done, and meets expectations. The first five assignments will be worth 4% each, and the last assignment will be worth 5%. I will not provide any make-up or bonus work if you miss any assignments.

The midterms will not be cumulative. I will indicate in class which topics will be covered on each midterm. The midterms will be conducted during regular class hours. The format of the midterm will be multiple-choice. 

If you miss a midterm, please contact me within 48 hours so we can determine what documentation you will need to submit (self-declaration of illness form or VIF). If you miss at least one of the midterms,  you will be required to take a make-up midterm at the end of the year. The date for the make-up midterm will be determined by the Department of Economics and usually takes place after the exam period.

Assignment Screening

No assignment screening will be used in this course.

Administrative Policy

Intellectual property.

Students should be aware that this course contains the intellectual property of their instructor, TA, and/or the University of Waterloo. 

Intellectual property includes items such as:

  • Lecture content, spoken and written (and any audio/video recording thereof);
  • Lecture handouts, presentations, and other materials prepared for the course (e.g., PowerPoint slides);
  • Questions or solution sets from various types of assessments (e.g., assignments, quizzes, tests, final exams); and
  • Work protected by copyright (e.g., any work authored by the instructor or TA or used by the instructor or TA with permission of the copyright owner).

Course materials and the intellectual property contained therein, are used to enhance a student’s educational experience. However, sharing this intellectual property without the intellectual property owner’s permission is a violation of intellectual property rights.  For this reason, it is necessary to ask the instructor, TA and/or the University of Waterloo for permission before uploading and sharing the intellectual property of others online (e.g., to an online repository).

Permission from an instructor, TA or the University is also necessary before sharing the intellectual property of others from completed courses with students taking the same/similar courses in subsequent terms/years.  In many cases, instructors might be happy to allow distribution of certain materials. However, doing so without expressed permission is considered a violation of intellectual property rights.

Please alert the instructor if you become aware of intellectual property belonging to others (past or present) circulating, either through the student body or online. The intellectual property rights owner deserves to know (and may have already given their consent).

Chosen/Preferred First Name

Do you want professors and interviewers to call you by a different first name? Take a minute now to verify or tell us your chosen/preferred first name by logging into WatIAM .

Why? Starting in winter 2020, your chosen/preferred first name listed in WatIAM will be used broadly across campus (e.g., LEARN, Quest, WaterlooWorks, WatCard, etc). Note: Your legal first name will always be used on certain official documents. For more details, visit Updating Personal Information .

Important notes

  • If you included a preferred name on your OUAC application, it will be used as your chosen/preferred name unless you make a change now.
  • If you don’t provide a chosen/preferred name, your legal first name will continue to be used.

Mental Health Support

All of us need a support system. The faculty and staff in Arts encourage students to seek out mental health support if they are needed.

Due to COVID-19 and campus closures, services are available only online or by phone.

  • Counselling Services:  [email protected] / 519-888-4567 ext. 32655
  • MATES :  one-to-one peer support program offered by the Waterloo Undergraduate Student Association (WUSA) and Counselling Services

Off campus, 24/7

  • Good2Talk :  Free confidential help line for post-secondary students. Phone: 1-866-925-5454
  • Grand River Hospital: Emergency care for mental health crisis. Phone: 519-749-4300 ext. 6880
  • Here 24/7 : Mental Health and Crisis Service Team. Phone: 1-844-437-3247
  • OK2BME : set of support services for lesbian, gay, bisexual, transgender or questioning teens in Waterloo.  Phone: 519-884-0000 extension 213

Full details can be found online on the Faculty of Arts website

Download UWaterloo and regional mental health resources (PDF)

Download the WatSafe app to your phone to quickly access mental health support information.

Territorial Acknowledgement

We acknowledge that we are living and working on the traditional territory of the Attawandaron (also known as Neutral), Anishinaabe and Haudenosaunee peoples. The University of Waterloo is situated on the Haldimand Tract, the land promised to the Six Nations that includes ten kilometres on each side of the Grand River.

For more information about the purpose of territorial acknowledgements, please see the CAUT Guide to Acknowledging Traditional Territory .

Academic freedom at the University of Waterloo

Policy 33, Ethical Behaviour states, as one of its general principles (Section 1), “The University supports academic freedom for all members of the University community. Academic freedom carries with it the duty to use that freedom in a manner consistent with the scholarly obligation to base teaching and research on an honest and ethical quest for knowledge. In the context of this policy, 'academic freedom' refers to academic activities, including teaching and scholarship, as is articulated in the principles set out in the Memorandum of Agreement between the FAUW and the University of Waterloo, 1998 (Article 6). The academic environment which fosters free debate may from time to time include the presentation or discussion of unpopular opinions or controversial material. Such material shall be dealt with as openly, respectfully and sensitively as possible.” This definition is repeated in Policies 70 and 71, and in the Memorandum of Agreement, Section 6

Cross-listed courses

Please note that a cross-listed course will count in all respective averages no matter under which subject code it has been taken. For example, a PHIL/PSCI cross-list will count in a Philosophy major average, even if the course was taken under the Political Science subject code.

Economics Department Deferred Final Exam Policy

All deferred Final Exam requests for economics courses are administered by the Economics Undergraduate Office. Please consult the Deferred Exam Policy at 

https://uwaterloo.ca/economics/undergraduate/resources-and-policies/deferred-final-exam-policy.

University Policy

Academic integrity : In order to maintain a culture of academic integrity, members of the University of Waterloo community are expected to promote honesty, trust, fairness, respect and responsibility. [Check the Office of Academic Integrity for more information.]

Grievance: A student who believes that a decision affecting some aspect of their university life has been unfair or unreasonable may have grounds for initiating a grievance. Read Policy 70, Student Petitions and Grievances, Section 4 . When in doubt, please be certain to contact the department’s administrative assistant who will provide further assistance.

Discipline: A student is expected to know what constitutes academic integrity to avoid committing an academic offence, and to take responsibility for their actions. [Check the Office of Academic Integrity for more information.] A student who is unsure whether an action constitutes an offence, or who needs help in learning how to avoid offences (e.g., plagiarism, cheating) or about “rules” for group work/collaboration should seek guidance from the course instructor, academic advisor, or the undergraduate associate dean. For information on categories of offences and types of penalties, students should refer to Policy 71, Student Discipline . For typical penalties, check Guidelines for the Assessment of Penalties .

Appeals: A decision made or penalty imposed under Policy 70, Student Petitions and Grievances (other than a petition) or Policy 71, Student Discipline may be appealed if there is a ground. A student who believes they have a ground for an appeal should refer to Policy 72, Student Appeals .

Note for students with disabilities: AccessAbility Services , located in Needles Hall, Room 1401, collaborates with all academic departments to arrange appropriate accommodations for students with disabilities without compromising the academic integrity of the curriculum. If you require academic accommodations to lessen the impact of your disability, please register with AccessAbility Services at the beginning of each academic term.

Turnitin.com: Text matching software (Turnitin®) may be used to screen assignments in this course. Turnitin® is used to verify that all materials and sources in assignments are documented. Students' submissions are stored on a U.S. server, therefore students must be given an alternative (e.g., scaffolded assignment or annotated bibliography), if they are concerned about their privacy and/or security. Students will be given due notice, in the first week of the term and/or at the time assignment details are provided, about arrangements and alternatives for the use of Turnitin in this course.

It is the responsibility of the student to notify the instructor if they, in the first week of term or at the time assignment details are provided, wish to submit alternate assignment.

Unit 3 discussion assignment micro economics

IMAGES

  1. Introduction to macroeconomics

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  3. Introduction to Macroeconomics

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  4. Macroeconomic variables Assignment

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VIDEO

  1. Macroeconomics

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  5. Introduction to Macroeconomics || Macroeconomics || Notes 📝

  6. Important questions of Introduction of Macroeconomics

COMMENTS

  1. Lesson summary: Introduction to Macroeconomics

    Macroeconomics examines the interactions and behavior of entire nations' economies, such as why recessions occur, what causes economic growth, and how countries can benefit from specialization and trade. Common Misperceptions Economics is not the study of stock markets, money, or how to run a business.

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  3. Ch. 1 Introduction

    Introduction to Demand and Supply; 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services; 3.2 Shifts in Demand and Supply for Goods and Services; 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process; 3.4 Price Ceilings and Price Floors; 3.5 Demand, Supply, and Efficiency; Key Terms; Key Concepts and Summary; Self-Check Questions; Review Questions

  4. PDF Macroeconomics: an Introduction

    A Brief Overview of the History of Macroeconomics I • Classics (Smith, Ricardo, Marx) did not have a sharp distinction be-tween micro and macro. • Beginning of the XX century: Wicksell, Pigou. • J.M. Keynes, The General Theory of Employment, Interest, and Money (1936). • 1945-1970, heyday of Neoclassical Synthesis: Samuelson, Solow, Klein.

  5. Macroeconomics

    Macroeconomics 8 units · 46 skills. Unit 1 Basic economics concepts. Unit 2 Economic indicators and the business cycle. Unit 3 National income and price determination. Unit 4 Financial sector. Unit 5 Long-run consequences of stabilization policies. Unit 6 Open economy: international trade and finance.

  6. PDF Introduction to Macroeconomics Lecture Notes

    Macroeconomics is 'non-experimental': like, e.g., history, macro-economics cannot conduct controlled scienti fic experiments (people would complain about such experiments, and with a good reason) and focuses on pure observation. Because historical episodes allow diverse interpretations, many conclusions of macroeconomics are not coercive.

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  11. Assignments

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  12. Introduction to Macroeconomics Assignment

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  14. Introduction of Macroeconomics

    Macroeconomics is the branch of economics concerned with the study of aggregate economic activity. In macroeconomics, a variety of economy-wide phenomena is thoroughly examined such as, inflation, price levels, rate of growth, national income, gross domestic product and changes in unemployment.

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    Module 6 Assignment: Problem Set — GDP and Economic Growth. Module 7 Assignment: The State of the Macro Economy. Module 7 Assignment: Data Project Part 2. Module 7 Discussion: How is the Economy? Module 7 Assignment: Problem Set — Unemployment and Inflation. Module 8 Discussion: The Business Cycle and the AD-AS Model.

  16. PDF BPEP-UB-9002L01, Introduction to Macroeconomics

    Given an introduction to the macroeconomic definitions, the course moves to the classical macro equilibrium for an open economy. This course takes both a short and a long-term view of the economy, and aims to help students understand how modern macroeconomics can shed light on facts such as business cycles, economic growth, unemployment and money.

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    Introduction to Macroeconomics 220:103:01 8/12/2022 subject to revision Will there be another recession and if so, when will it begin (business ... Through lectures, discussions, assignments, and readings students will become familiar with the theoretical framework of macroeconomics and learn to apply it to the analysis of macroeconomic policy ...

  18. Subject Guides: ECO 210: Introduction to Macroeconomics: WELCOME

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  19. Introduction to Macroeconomics Quiz Flashcards

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  20. Course Outline

    Introduction to Macroeconomics Fall 2022 ECON 102 Published Sep 07, 2022. Print / Save PDF. ... will receive full marks if the work is submitted on time, appropriately done, and meets expectations. The first five assignments will be worth 4% each, and the last assignment will be worth 5%. I will not provide any make-up or bonus work if you miss ...

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    Introduction | The Economic Approach Economists study everything from money and prices to child rearing and the environment. They analyze small-scale decision-making and large- scale international policy-making. They compile data about the past and make predictions about the future.

  22. PDF Course Title: INTRODUCTION TO MACROECONOMICS

    This is an introductory Macroeconomics course and is one of the core courses offered by the Department of Economics. ECON 1002 is a foundation course for the understanding of economics and is designed to equip students with the tools necessary for analyzing real world macroeconomic problems. It will serve as the basis for a more advanced course ...

  23. 1.1

    A. Introduction: topic sentence describing participation in the economy through buying and selling. B. Examples: bought a book for my e-reader instead of music; sold coffee at work. C. Economic principles: consumer (buying), producer (selling), opportunity cost. D. Conclusion: summary of economic participation through acting as a consumer and ...

  24. Unit 3 discussion assignment micro economics (docx)

    Unit 3 discussion assignment micro economics. Introduction In this article, I will be discussing why Price elasticity in the hotel industry is not what it used to be. I will expatiate my opinion on how pricing strategies might vary for different types of hotels such as luxury resorts and budget accommodations.