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ECON202 MACROECONOMIC THEORY I

Course Objectives

By the end of this course, the students will be able to

• understand macroeconomic aggregates and have a solid background in understanding the mechanisms underpinning the macroeconomy;
• analyze the core theoretical models used in macroeconomics, for both closed and open economies, and use them to enhance understanding of real-world macroeconomic experiences (especially involving macroeconomic policy);
• develop a solid grasp of macroeconomic analysis at the intermediate level using both graphical and algebraic techniques;
• develop skills to critically evaluate explanations of economic outcomes in this framework and policy success on both a theoretical and empirical basis;
• understand theoretical models which are used to explain the behavior of the aggregate economy in the short-, medium-, and long-run and gain the ability to use these models to answer questions about the impact of shocks and of macroeconomic policy on a small open economy.
• understand the response of policy makers to macroeconomic issues and expectations;
• retrieve macroeconomic data from statistical sources using the internet or the library;
• perform basic statistical analysis with macroeconomic data using Excel.

Course Content

Measurement of economic activity; national income accounting; determination of the level of economic activity; the `Classical` and `Modern` theories of income and employment; general equilibrium of product and money markets; impact of international trade fluctuations and growth in economic activity; aggregate income distribution.

Course Learning Outcomes

By the end of this course, students will be able to

• Describe national income accounting. 
• Demonstrate their understanding of the extended Keynesian income-expenditure model algebraically and diagrammatically. 
• Explain the creation and role of the Money in the economy. 
• Derive the IS and LM curves from equilibria in the asset and goods markets. 
• Evaluate the relationship between interest rates and income using IS-LM analysis.
• Evaluate the relationship between prices and income using AS-AD analysis. 
• Use the IS-LM and AD-AS models to analyze a variety of fiscal and monetary policy choices. 
• Use economic analysis to evaluate current social and political issues and policies
• Differentiate between Keynesian theory and Classical theory. 
• Explain and compare the impacts of monetary policy and fiscal policy in a closed economy. 
• Explain and compare the impacts of monetary policy, fiscal policy and exchange rate policy in an open economy. 
• Explain labor market and Phillips-curve. 
• Analyze Phillips curve, Okun's Law and basic macroeconomic variables. 
• Apply macroeconomics to current policy issues.