CHAPTER 1
The Science of Macroeconomics
Chapter One
1
Welcome to Macroeconomics!
Everyone has reason to think critically about macroeconomic
issues. It is imperative that we seek to understand why some
countries are growing faster or slower than others o

Principles of Econometrics Assignment 1 Due date: Oct. 27 in class
1. Refer to the following equation:
Qs = 1 + 2P + 3Pr + 4Ps + 5TAX + e
s
where Q is annual quantity supplied, P is the price of the product, Pr is the price of
resources, Ps is the price o

Econometrics Assignment 2
Due date: Nov. 17th, in Class.
1. You estimate a simple linear regression model using a sample of 62
observations and obtain the following results (estimated standard errors in
parentheses below coefficient estimates):
y = 97.25

Aggregate Demand I:
Building the IS-LM Model
the IS curve, and its relation to:
the Keynesian cross
the loanable funds model
the LM curve, and its relation to:
the theory of liquidity preference
how the IS-LM model determines income and the interest ra

1 Facts about the business cycle
2 How the short run differs from the long run
3 An introduction to aggregate demand
4 An introduction to aggregate supply in the short run and
long run
5 How the model of aggregate demand and aggregate supply
can be used t

Money and Inflation
The classical theory of inflation
causes
effects
social costs
Classical assumes prices are flexible & markets clear
Applies to the long run
CHAPTER 4
Money and Inflation
Inflation and its trend, 1960-2009
15%
% change in CPI from
12

Unemployment
about the natural rate of unemployment:
what it means
what causes it
understanding its behavior in the real world
CHAPTER 6
Unemployment
Natural rate of unemployment:
The average rate of unemployment around which the economy
fluctuates.
In a

The Economy in the Very Long Run
Economic Growth
Capital Accumulation and Population Growth
the closed economy Solow model
how a countrys standard of living depends on its saving and
population growth rates
how to use the Golden Rule to find the optimal s

CHAPTER 3
National Income:
Where It Comes From and Where It
Goes
Chapter Three
1
It is a quite simple but powerful analytical model built around
buyers and sellers pursuing their own self-interest (within
rules set by government). Its emphasis is on the

CHAPTER 2
The Data of Macroeconomics
Chapter Two
1
Gross Domestic Product (GDP) is the dollar
value of all final goods and services
produced within an economy in a given
period of time.
The consumer price index (CPI) measures
the level of prices.
The une