Overview

Description

CALENDAR DESCRIPTION:

The principal elements of theory concerning money and income, distribution, social accounts, public finance, international trade, comparative systems, and development and growth. Students with credit for ECON 205 cannot take ECON 105 for further credit. Quantitative/Breadth-Soc.

COURSE DETAILS:

Macroeconomics is the study of “the economy” as a whole, in contrast to microeconomics which focuses on understanding the behavior of individual businesses, people and markets. Over the course of the semester, we will aim to develop an informed basic understanding of inflation, unemployment, economic growth, financial markets, business cycles, and economic policy.

Topics:  This course is taught in universities all over the world and has a standard list of topics to be covered:

1. Microeconomic foundations.
   We will start by introducing (if you have not taken ECON 103) or reviewing (if you have taken ECON 103) a few core ideas from microeconomics: scarcity, markets, supply and demand.
   
   
2. Social welfare and the gains from trade.
   Markets are very powerful tools for organizing human activities and allocating resources. We will discuss the potential role of market exchange to enhance human well-being, as well as some conditions under which it will do the opposite.
   
   
3. Measuring economic activity.
   Economics is a fundamentally quantitative field of study; it is built on careful measurement of the things we care about. We typically measure the value of a country’s economic activity using a statistic called Gross Domestic Product (GDP).  We will explore the construction of GDP and related economic statistics, their interpretation, and their limitations.
   
   
4. Economic growth.
   The average Canadian today has a standard of living well beyond that of the average Canadian 100 years ago, or of the average person in most of the world today. This material abundance is the result of decades of consistent economic growth. Economic growth has been minimal for much of human history, which raises the crucial question of what conditions facilitate or prevent economic growth.  We will explore this question.
   
   
5. 
   Most people work to survive and pay their bills. But sometimes people find it difficult to find work, a situation we call unemployment. We will discuss the measurement, causes and consequences of unemployment.
   
   
6. Inflation, money, and exchange rates.
   The prices of goods and services tend to increase over time, an in recent years have increased more rapidly than usual. These price increases are called inflation.  We will discuss the measurement, causes, and consequences of inflation, along with related issues such as money and the exchange rate.
   
   
7. Consumption, saving, investment and financial markets.
   Markets are a mechanism for allocating resources. Financial markets are a crucial allocation mechanism that connects spending and savings decisions made by households with investment decisions made by businesses. Well-functioning financial markets direct household savings towards productive investments, leading to economic growth and a higher standard of living.  But financial markets can fail in a spectacular and costly manner, as in the Great Depression of the 1930s or the global financial crisis of 2008.  We will discuss these markets, their components, and their role in the economy as a whole.
   
   
8. Business cycles.
   Most of the time, the economy is growing and it is not too hard to find a job. But occasionally an economy enters a sustained period of reduced (or even negative) economic growth and high unemployment, also called a recession. We will discuss several theories of what causes recessions, as well as associated policy recommendations for avoiding or ameliorating them.
   
   
9. Monetary policy.
   Central banks such as the Bank of Canada or the US Federal Reserve play an important role in the economy through their influence on the financial system and the supply of money. We will review the structure of central banks, their available policy tools, and the consequences of using these tools for economic growth, unemployment, inflation, and exchange rates.
   
   
10. Government spending, taxes, and fiscal policy.
    Governments also influence the economy by collecting taxes, issuing bonds, and spending the proceeds on things like social services, infrastructure, education, and the military. We will discuss the basic components of these decisions, and how they may affect the economy as a whole.

 

In addition, we will regularly explore these topics with reference to current events. We will track the release of major economic statistics and policy announcements, and we will talk about any major macroeconomic events – financial crises, natural disasters, etc. – that occur over the course of the semester.  Economics courses often ask you to invest a substantial amount of effort into understanding abstract theory (and a little math), and this course will be no exception. But one of my goals is demonstrating that the investment pays off and will give you a better understanding of the world around you.

 

Grading

Materials

REQUIRED READING:

RECOMMENDED READING: