Principles of Macroeconomics

Macroeconomics is a way of thinking about all markets together, rather than single markets individually. Macroeconomics answers questions like,

• Why did the Great Depression happen in so many different countries at once?
• Why are some countries rich and others poor?
• What role do banks and financial firms play in the economy?
• Why is the stock market so unpredictable?
• How should financial markets be regulated?
• How does inflation affect an economy?

The goal of this class is to give you the tools to understand the macroeconomy, to appreciate the functional role of important institutions, and to be able to evaluate policy proposals.

The class is structured in four roughly equal units:

1. Basic concepts in Macro — Supply and demand, marginal analysis, opportunity cost, the volume of spending, the nominal/real distinction, national income accounting
2. Long-run Macro — Trade, growth and development, institutions
3. Short-run Macro — Business cycles, unemployment, monetary and fiscal policy, inflation, financial markets
4. International Macro — Exchange rates, the trade balance, economic crises