Unit 2504: Macroeconomics

1. Introduction to Macroeconomics

• Definition and scope of macroeconomics
• Distinction between microeconomics and macroeconomics
• Key macroeconomic variables: national income, unemployment, inflation, economic growth
• Importance of studying the economy as a whole

2. Macroeconomic Indicators

• Gross Domestic Product (GDP)
  • Definition and measurement (nominal vs. real GDP)
  • Limitations of GDP
• Consumer Price Index (CPI)
  • Measuring inflation using CPI
  • Issues in CPI measurement
• Unemployment Rate
  • Types of unemployment (frictional, structural, cyclical)
  • Measuring unemployment
• Balance of Payments
  • Components: current account, capital account
  • Significance for economic health

3. Aggregate Demand and Aggregate Supply

• Aggregate Demand (AD)
  • Components: consumption, investment, government spending, net exports
  • Determinants and shifts in AD
• Aggregate Supply (AS)
  • Short-run vs. long-run aggregate supply
  • Factors affecting AS
• Interaction of AD and AS
  • Determining price level and output
  • Equilibrium and disequilibrium

4. Fiscal Policy

• Role of government in the economy
• Instruments of fiscal policy
  • Government spending
  • Taxation
• Budget deficits and surpluses
• Types of fiscal policy
  • Expansionary fiscal policy
  • Contractionary fiscal policy
• Fiscal policy’s impact on aggregate demand and economic growth

5. Monetary Policy

• Role of central banks
• Tools of monetary policy
  • Open market operations
  • Reserve requirements
  • Discount rate
• Controlling money supply and interest rates
• Inflation targeting and price stability
• Monetary policy transmission mechanism

6. Economic Growth and Development

• Definitions: economic growth vs. economic development
• Factors influencing long-term growth
  • Technology and innovation
  • Human capital (education, skills)
  • Physical infrastructure
  • Institutional quality and governance
• Sustainable development considerations
• Role of investments and savings

7. International Trade and Exchange Rates

• Theories of international trade
  • Comparative advantage
  • Absolute advantage
• Trade policies
  • Tariffs, quotas, subsidies
  • Free trade agreements
• Effects of tariffs and quotas on domestic and global economies
• Exchange rates
  • Determination of exchange rates
  • Fixed vs. floating exchange rates
  • Impact on imports, exports, and capital flows

8. Economic Fluctuations and Business Cycles

• Definition and phases of the business cycle
  • Expansion
  • Peak
  • Contraction (recession)
  • Trough
• Causes of economic fluctuations
  • Aggregate demand shocks
  • Aggregate supply shocks
• Effects of recessions and expansions on employment and output

9. Inflation and Unemployment

• Types and causes of inflation
• Measuring inflation and unemployment
• The Phillips Curve
  • Short-run and long-run relationships
• Natural rate of unemployment
• Trade-offs between inflation and unemployment
• Policy challenges in managing inflation and unemployment

10. Economic Policies and Their Impacts

• Overview of macroeconomic policy objectives
  • Economic stability
  • Growth
  • Development
• Evaluating effectiveness of fiscal and monetary policies
• Policy trade-offs and limitations
• Case studies on policy impacts
• Role of international organizations and cooperation